The public perception of the emergence of near-field communications (NFC) to a great extent has tied it to the online payment industry. That idea generally has been pushed by the telecommunications industry and vendor community for a good reason: Transitioning even a small percentage of the money that goes into the coffers of the credit card companies will quickly add up to billions of dollars.
Currently, however, the use of NFC has moved away from the sole focus on the payment card industry. That avenue still is alluring, to be sure. A market that counts its receipts in the trillions of dollars doesn’t lose its luster very easily. During the past year or two, however, there is more activity in far more mundane uses of the potent smartphone/NFC duo.
The reason is fairly simple: The payment card industry is complex and multilayered. Indeed, NFC is only a small portion of what has to be done to start using smartphones instead of plastic. David Eads, the founder of Mobile Strategy Partners LLC, said that in addition to the core NFC technology, central banks, regulators and carriers must be on board. Terminal equipment must be created and deployed. And all this must all be coordinated and executed across national borders and in a way that results in systems that are extraordinarily secure.
There is some activity. ISIS, a company founded by AT&T Mobility, T-Mobile USA and Verizon Wireless, is up and running in Salt Lake City and Austin, for instance. For the most part, however, the industry is its early days. The corporate maneuvering, relationships, consortiums and partnership that accompany an opportunity this big only now are settling. In short, NFC for payments is a great potential business, but most likely the wrong one on which the technology should break its teeth. “Trying to transform the payment industry all at once with new technology and getting the [payment services deployed] is almost impossible,” Eads said.
The goal of making NFC relevant and allowing it to generate revenue is not waiting for the payment card industry to catch up. “[W]hile NFC for mobile payments has been the focus of discussions to date, mass market adoption of NFC for transactions is still some time away,” wrote Mikhail Damiani, the CEO and chairman of the board of Blue Bite, in response to emailed questions. “NFC is the most simple and intuitive bridge between the physical and digital worlds and the near-term opportunity is simply about making physical/digital connections easier. There has been growth in both the number of marketing campaigns using NFC and the number of NFC interactions (taps) per campaign.”
Another way to put this is that the NFC/smartphones sector must crawl before it can walk, and the latest news suggests that it has at least entered the creeping stage. The biggest indication that this is happening was the introduction of programmable stickers that are affixed to the surface of a smartphone that enable tasks — which predominantly are mundane — to be performed. Sony did this with SmartTabs and Samsung with TecTiles.
Samsung probably has generated the most notoriety. Last month, the company announced the second upgrade of the original product. The bottom line is that there is a tremendous amount that can be done with NFC before it becomes a mainstay of the payment card industry.
Much of the non-payment card initiatives made possible by SmartTags and TecTiles focus on everyday tasks such as setting alarm clocks and home security systems or synching the phone to Bluetooth in an automobile. None of these, obviously, are a game changer. But in totality they likely will further embed NFC in the public’s consciousness. That, in turn, will make the use of the technology in payment cards go more smoothly.
Tam Hulusi, the senior vice president for strategic innovation at HID Global, offered some examples of how NFC can be used by businesses. One primary use of NFC will be to ensure authenticity. He said that NFC can be used in conjunction with encryption keys to ensure that an attached item — be it a diploma or a work of art — is not a forgery. Another example is hotel check-ins. In this scenario, a frequent guest can have a key that gets the proper door access code via a mobile app. When the guest arrives, he or she can enter the room, which has an NFC-enabled lock. Physical check-in? That can come later.
Damiani sees NFC as a key marketing tool. “NFC is being used to enable two-way interactions with what is currently impression based media,” he wrote. “This includes enhancing outdoor media with NFC to allow consumers to tap posters and receive content, offers, product information, download apps, etc. NFC is also being used in print to bring magazines to life and enabling business cards for direct vcard downloads to the mobile phone.”
The bottom line is that the future looks good for NFC and all the companies that support its ecosystem. The near term will see use of NFC tags to turn the lights on and off and other prosaic but important tasks. In that way, it will become an accepted technology. At the same time, businesses are using NFC to build tighter relationships with their customers and prospects. Finally, payment card platforms — the family of applications that many thought would be first off the blocks and the one that truly represents the pot of gold — will launch when they are ready. At that point, the public will be ready and waiting.