NFC is inching its way into the cellular world with its promise to turn mobile phones into intelligent payment devices for everyday commercial transactions. But NFC-based mobile payments still need a business case that benefits all stakeholders with often competing interests
Near field communication (NFC) is gaining traction in the wireless world as interests in mobile payments, including the potential for using handsets as payment devices at the point-of-sales, continues to gain momentum in many markets.
Evolving from a combination of RFID and interconnection technologies, NFC is a short-range wireless connectivity technology standard designed for intuitive, simple and safe communication between mobile phones, PCs and electronic devices. The technology operates in the 13.56-MHz frequency range and can establish connections between devices at a range of about 10 cm and delivers throughputs of 424 kbps.
A key advantage of incorporating NFC into handset is that it can turn a mobile phone into a cashless wallet, enabling users to buy train or bus tickets, purchase good and service at point-of-sales, and acquire entertainment downloads or new services with a wave of the handset.
Patrick Henzen, senior manager of NFC and identification development at NXP, formerly known as Philips Semiconductors, says NFC can do a lot more than contactless payment. For example, as well as buy a train ride, a mobile user can check his previous transaction records and download a train schedule with an NFC enabled handset. Other applications could involve service discovery, such as picking up a URL or other information from a billboard or a magazine.
Ready for launch
Although NFC has emerged quite recently, jointly developed by Philips and Sony in 2002, some progress has made in the past 12 months to accelerate commercial deployment of NFC in the mobile payment space, due to the push by Nokia and NXP as well as increased interests from both mobile operators and transaction firms.
Nokia, a key supporter behind the standard, already rolled out the world's first NFC handset, the 3220, and debuted the first commercial NFC-enabled mobile payment service in Hanau, Germany, with Vodafone. A series of NFC trials is also going on in Malaysia, South Korea, Thailand, the Philippines and China as industry players push NFC deployment in Asia.
A trial in Xiamen, for instance, is the first of its kind in China. It is jointly conducted by Nokia, NXP, Xiamen Mobile and e-Tong. Under the trial, which started in June, about 100 China Mobile subscribers are able to conduct secure mobile payment services in around 4,500 places, including restaurant, transportation systems, movie theaters and convenience stores via a Nokia 3220. As well as purchasing, the participants are also able to check the balance and up to 20 transaction records.
In the next step, the trial will allow mobile users to top up over the air, according to Joseph Zheng, director of NFC consumer business, Nokia Ventures Organization Asia (NVO Asia), the handset maker's corporate venturing arm in Asia.
In addition, SK Telecom in May announced a cooperation with NXP in the development and deployment of NFC technology. The two, along with local partners, are conducting a field trial within SKT office buildings, providing 400 SKT employees and visitors with NFC-enabled mobile phones that will give them access to services and applications such as payment, ticketing, content downloads and access control.