The potential of NFC and the obstacles that stand in its way

October 29, 2012

    NFC stands for Near Field Communication and it allows short-range wireless communications. There are a lot of potential applications for NFC which we’ll delve into in a minute, but they all revolve around close proximity data exchange between devices, or between an unpowered NFC chip (usually called a tag) and a smartphone. If you’re interested in the technical details then read our guide on how NFC works.

    Analysts have been predicting the rise of NFC for a while now, but expectations vary wildly. The main driver that’s widely touted is mobile payments, but the number of NFC-enabled devices in circulation is still relatively small, Forrester estimates around 100 million NFC devices will ship in 2012. ABI Research puts the value of NFC mobile payments at $4 billion for 2012, but predicts they’ll be worth $191 billion in 2017. That’s quite a jump.

    We are certainly starting to see more NFC-enabled devices hitting the market and Google is betting big on the technology. The Android platform now supports NFC and it powers the Android Beam feature for exchanging data between devices, as well as Google Wallet for mobile payments. Microsoft’s Windows Phone and RIM’s BlackBerry platform are also adopting NFC functionality which leaves Apple’s iOS as the odd one out.

    What are the potential uses of NFC?

    Mobile payments are the most talked about use for NFC. The basic idea is that you can pay for goods or services by simply tapping your phone near a payment terminal. You have the option to PIN protect transactions for greater security.

    nfc-mobile-payments

    Programmable tags

    NFC is capable of a lot more than contactless payment. With NFC tags, such as Samsung’s TecTiles, you can actually program an unpowered NFC tag and then tap your phone near it to spark an action. You could stick an NFC tag on your nightstand that sends your phone into silent mode. You could create an NFC tag that directs your phone’s browser to a specific web page or a location in Google Maps. You could set up a profile for your car’s dashboard which prepares your smartphone for a journey by tweaking volume, switching off Wi-Fi and loading up Google Maps. The possibilities are endless.

    Marketing and advertising

    Advertising is inevitably another big potential area for NFC. Rock the Vote has launched a campaign that includes NFC tags in bus shelters which allow smartphone users to tap their devices to immediately register to vote. NFC can be used on advertising posters and other materials in much the same way as QR codes have been, except that NFC is easier for the user and capable of more. Ads and promotional literature could include NFC tags that spark further information, launch video or audio files, provide the user with coupons or tickets, or automatically register a social media connection, such as a Facebook like.

    Boon for business

    The technology could also be very handy for business and networking. Business cards could include website links, LinkedIn profiles, and full contact details that are automatically added to your smartphone. Invitations and mail outs could include directions. Boxes in factories could be identified with NFC tags. Even goods in virtual stores could be ordered via NFC with your smartphone and delivered from a depot.

    Plenty of other uses

    If you can use your smartphone as a payment method, then paying for things like public transport and parking meters could be as simple as swiping your phone. You could even tap a newspaper terminal on your daily commute to download the latest issue to your device.

    NFC could enable you to use your smartphone as a ticket or a key. It could be the conduit for a digital ID. There really are a lot of potential uses.

    What’s the obstacle?

    There’s a bit of a chicken and egg scenario going on at the moment. Some companies are reticent to splash out on NFC before there’s a good-sized user base and consumers aren’t seeing enough possibilities for it at the moment to make it a must-have feature worth upgrading for. There’s also no central standard – everyone is competing with different NFC systems.

    Mobile payments competition

    The market for mobile payments is only just developing and there are lots of services right now. Google got in early with Google Wallet. Isis launched last week and it’s owned and operated by the big carriers, AT&T, T-Mobile and Verizon Wireless. There’s also a PayPass service being offered by Mastercard and Visa has its own NFC payment service. There are others looking to gain an early foothold.

    Set against them in the mobile payment arena we’ve got a number of banking apps and non-NFC services for tickets and coupons, like Apple’s Passbook app. There are also alternative payment options from companies like Square and PayPal that don’t use NFC technology.

    Although consumers aren’t buying smartphones specifically for NFC, the technology is still rolling out on a lot of the latest devices. As those numbers grow it will make more sense for companies to take advantage and we’ll see more innovation in terms of NFC applications.

    Is NFC secure?

    Fears over security could be behind the slow adoption of NFC. Could sensitive information be stolen? Could cyber criminals program NFC tags to direct your smartphone or even hijack it? There’s always a bit of paranoia over new tech developments and until they are thoroughly tested and proven safe some people will remain wary.

    It is worth remembering, however, that NFC would be toggled on and off when you need to use it – it’s not something you would have on all the time. It does also require close proximity (we’re talking about 4cm or less), it supports encryption, and you can password or PIN-protect NFC transactions.

    Are people using NFC?

    Part of the problem is that we don’t have any reliable statistics for NFC use. Even although there are NFC enabled devices out on the market already we don’t know how people are using the functionality right now. How many people have tried NFC tags for automating tasks? How many people have used NFC for mobile payments? How many people have scanned NFC adverts? More importantly, was that experience good or bad? If you can weigh in, then please do post a comment and tell us about your impressions of NFC so far.

    It’s surely just a matter of time before NFC really takes off. The question is – will it be months or years?

    Comments

    • https://play.google.com/store/apps/details?id=com.ootpapps.saving.made.simple&feature Out of the Park Apps

      Sure mass adoption will take some time, until then, get some nfc stickers and place them around your house and work. Just program these stickers and you can have tons of fun with nfc right now!

    • Jeff Weatherup

      I use NFC for automation of processes. For instance, I have an NFC tag that I programmed on a little stand on my desk at work that toggles WiFi on/off, and one at my apartment that turns off GPS and turns the ringer volume up. It’s very, very useful for that. However, I haven’t been able to use it for payment, since no retailers (or even gas stations, to my knowledge) in my area support it. I admit, working with technology and knowing the risks, I would be very hesitant to make payments using this technology, but if someone could convince me that it’s safe, I would much prefer quickly passing my phone over something to pay, rather than getting my credit card out and swiping.

    • MasterMuffin

      I’m not scared of NFC but I see the point that the people who scare it have: Even though you test and testand test the safety, hackers always find ways! But I don’t care about that, just sayin’ :)

      • http://www.facebook.com/eccenux Maciej Jaros

        It’s as safe as bluetooth is. If you have bluetooth on and some insecure app, then someone could hack it from about 10 m. Furthermore if you are connected to the Internet someone could – theoretically – hack your device from all over the world (or even Mars for that matter ;-)). If there is a breach in security then NFC your safest friend.

        • MasterMuffin

          True, and as I said I’m more afraid of the people of Mars than NFC hacker but some people will always be scared of this like some people still are afraid of internet/bluetooth :)

    • http://twitter.com/kuyanyan Yanyan | RR

      The other reason NFC didn’t really take off that quickly is because everyone has been so focused on mobile payments when there are other uses for the technology. Admittedly, Google was a bit late in realising the potential of NFC. Even though they included it in the Nexus S, use was very limited and the average consumer will not be that interested in programming NFC tags to do a task. Nokia’s effort on the other hand was admirable. They touted how easy it was to pair bluetooth capable accessories with a single tap and they allowed for easy file transfer early on. Too bad, MeeGo and Symbian was already doomed at the time. Google on the other hand is still in the process of enhancing Android Beam. Barring phone availability, even S Beam is the superior NFC enhanced file transfer protocol. We can transfer videos over S Beam while Android Beam is still limited to photos.

    • z

      i don’t even know what is NFC

      • Tom C

        Did you even read the article? What kind of a question is that?

    • http://www.facebook.com/eccenux Maciej Jaros

      There is one more thing – NFC could be adopted very quickly if it would support wider range of frequencies. Libraries and shops all over the world… well most of it… use something that is called RFID. I’m sure everyone here found an RFID chip in new clothes or stuck to a box. Unfortunately, currently NFC only support one of RFID frequencies and many tags in use won’t work. Imagine you could go into a shop and read a tag from various things and add them to your virtual cart. This could just work straight away. The same with libraries – you could go to a page of a book in your hand and read about it more. Libraries (or shops) could use apps on their phones to control state of their books. It’s just that easy.

    • hollywoodfrodo

      I think the big problem is lack of knowledge – most people have no idea what nfc stands for much less what it does. I sell nfc tags at andytags.com and when I tell people what I do they always give me that confused look so I have to explain what nfc is and how cool it is and give them examples of how it can be used with nfc stickers in everyday life. nfc has so much potential – if the iphone 5 had it that would probably have made it mainstream. but since it doesn’t, it’s still lurking in the shadows of geekville for now…

    • John Wood

      Hi Simon.

      Great article, we (RapidNFC) actually have some new stats and case studies available on NFC use if these are of interest for any future articles?

      RapidNFC are Europe’s leading supplier of NFC tags, but we increasingly also sell more and more to the US. Please get in touch if you are interested in receiving some free tags for NFC reviews and demos. We could even create some custom NFC Stickers with the Android Authority logo?

      Thanks

      John (john@rapidnfc.com)

    • Space Gorilla

      Gartner’s estimate is that only two percent of mobile payments in 2013 will be done via NFC. Seems like bluetooth might be easier and more flexible as a mobile payments solution going forward. I guess time will tell. For whatever reason it seems that hardly anyone actually uses NFC.

      • Will

        2% is still bigger than 0% for bluetooth…

        • Space Gorilla

          Whether it is bluetooth or some other more flexible solution, the reality is NFC is not catching on. But hey, why base any opinion on actual reality? I’m probably wrong and *next year* will surely be the year NFC hits the big time :)

          • Will

            And the reality is bluetooth is not even on the table. What do you mean not catching on? All handsets released in the last 2 years have NFC: S3, S4, HTC One, Nexus…

            The problem is finding a standard for payments, nothing to do with the technology. It took years before Visa and Mastercard agreed for an industry standard for cards, blame them for this. Or you think that this is going to be resolved with magic if we use Bluetooth?

            • Space Gorilla

              So if we have two years of Android phones with NFC, and a billion Android phones, why are almost all mobile payments *not* done via NFC?

            • Will

              Because there is no standard. Meaning each bank implements their own way of mobile payment and each shop has to work with every bank to accept them. Totally impractical. Don’t get me started on security concerns…

              You think this all can be avoided by using bluetooth?!

            • Space Gorilla

              Maybe, maybe not (as I said), but it’s clear NFC isn’t being used by consumers as a mobile payment solution, it simply isn’t catching on. That would seem beyond debate right now.

            • Will

              Fair enough, I can’t disagree there.

              But I did not understand how you reached your original conclusion “Seems like bluetooth might be easier and more flexible as a mobile payments solution going forward”

            • Space Gorilla

              “Seems like” isn’t a conclusion. But it does seem to me that a solution that is more software-centric is by nature more flexible than one that is more hardware-centric.

            • Will

              I’m sorry, I must have misread, it sure looked to me you made up your mind about it.

              “seem to me” barely qualifies as proof that Bluetooth is easier to use for mobile payments. Unless, of course, you can show facts to back your claim.

            • StevenDrost

              True, but you seem to imply that the solution is another piece of technology. Much of the functionality could be replicated with Bluetooth or WIFI and achieve the same disastrous results. The solution is money, standards, partners and time, not another piece of tech.

            • Space Gorilla

              So at least we’re agreed that NFC is/has been a disaster. Now, to illustrate my point why don’t you list for me all the moving parts necessary for NFC to work, from consumer to retailer, all hardware and software. It should become clear how many points of friction exist. My theory is that some kind of bluetooth/wifi solution more driven by software can remove some of that friction.

            • Will

              Not NFC, rather mobile payments has been a disaster (I would say not as successful as we would want).

              NFC is used for much more than that.

            • Space Gorilla

              Well, much more in what sense? It’s all very similar usage, and not that widespread: http://en.wikipedia.org/wiki/Near_field_communication

            • Will

              Did you read the wiki article? Automation, images, sharing, peripheral control, business cards… plenty of examples

            • Space Gorilla

              Plenty of examples of the same general use, yes. I don’t consider that ‘much more’, especially in the context of discussing whether NFC will ever become popular. I don’t think it will. You’re free to disagree.

            • Will

              Depends how you define popular. By your standard, daily usage at least, then no, it is not popular. I should mention that I haven’t used bluetooth in years though.

            • Space Gorilla

              I think we can all agree that something the vast majority of people don’t use is not popular, it doesn’t depend at all on how you define popular. As for bluetooth, I doubt very much you’ve been able to avoid using it for years, it’s in a lot of stuff doing a lot of things, you’ve probably used it and simply not realized it.

            • Will

              No, I’m serious. I can’t think of a single situation where I need to use it… I never even turned it on. Seriously.

            • Space Gorilla

              In your phone, sure, I believe that. But bluetooth is all over the place, in billions of devices and systems. You could easily have used it without realizing it.

            • Will

              Oh, like wireless keyboards and such. Fair enough, I though we were talking about phones.

            • Space Gorilla

              We were talking about bluetooth.

            • Will

              And mobile payments. And what role bluetooth has there. I said it offers nothing extra compared to NFC. You think that because somehow bluetooth is more “software focused” it will allow banks/shops to agree to a standard. I don’t see that connection.

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