NFC, or Near Field Communication, is a low-power wireless communication technology standard that is being introduced into some new mobile devices, such as the Nexus S from Google. That doesn't mean the technology will be limited to mobiles. There could potentially be NFC-enabled cards, keys, or other devices.
Short Range Communication
NFC has more in common with Bluetooth than it does with Wi-Fi. NFC is very short range and not meant as a substitute for the Internet. However, it's not really a cord substitution technology either. It's really meant for short bursts of communication with nearby devices. Nearby means 4 inches or closer. You need two NFC devices (two phones, a phone and an access point or kiosk, a phone and a payment station, etc). It's also slow compared to many wireless standards, so you won't be transferring large files with NFC.
NFC Information Kiosks
One way NFC may be used is in information kiosks similar to the way QR codes are used now. You just put your phone or tablet near an information point and download a document, map, URL, or other item. Tap the NFC stand near your grocery store's meat department to get a killer flounder recipe. Tap the NFC stand at the store's entrance to find all the local coupons. Swipe your phone against the sign at the bus terminal and download a schedule and transit map.
NFC Payments and Google Wallet
Google and other companies have been working on ways to create payment transactions using NFC. Swipe or tap your phone against the cash register instead of using your credit card. This could include targeted ads and coupons, and the information on your consumer habits will be invaluable. Buy a package of corn chips, and you'll instantly get a coupon for guacamole. Take a Taxi to Broadway, and get a coupon to see Spider-man the Musical.
There are privacy concerns here, sure. However, this is no different than the tracking done by those loyalty cards many merchants issue today, except that it would be converged into a single device, which means you no longer have to fish through your wallet to find the specific loyalty card for each store. It's also possible they could eventually figure out cross-store promotions or other incentives for user behavior. This could either be viewed as a positive consumer experience or a bit Big Brother-ish.
In May of 2011, Google finally introduced Google Wallet, an online payment system that uses NFC to transfer money to the merchant from either a Citi MasterCard or a Google Prepaid card. This is still in the very early stages. It only works in New York and San Fransisco, and it only works with the Nexus S phone on the Sprint Network. You can use this at MasterCard PayPass stands.
How Paying With Google Wallet Works
- You've got your Nexus S phone on Sprint.
- You're in New York.
- You've established a Google Prepaid account or you're using a Cit MasterCard.
- You're at a participating merchant using a MasterCard PayPass station.
You walk over to the checkout. Rather than swiping a card, you're going to tap your phone on the the PayPass reader. You enter your PIN on your phone to confirm the transaction. Your payment is processed. If your merchant has a loyalty program, you may get a loyalty reward or an offer. This is like the coupons you get printed on the back of receipts at the grocery store.
NFC Security Concerns
There's some concern that NFC may prove to be easy to hack. While the technology isn't completely new (an earlier version has been in use by Japan for a while), NFC codes may end up being cracked more easily than credit cards. The NFC Forum claims that the close proximity would keep your data safe, but hopefully NFC payment technology will include more safeguards than that. Otherwise, your phone just became even more of a pickpocketing target. Since NFC is found on a phone, facial recognition could be one difficult to fake security measure.
Google Wallet relies on two extra pieces of security on top of the NFC technology. You must enter a PIN number in order to complete a Google Wallet transaction, and you should (but they don't seem to mandate) set the security lock on your Android phone, so nobody can open your phone without your permission in the first place. If your phone is stolen, you should report it to your credit card company and have them cancel your card number.