Business News/ Opinion / Are users hungry enough for NFC?

“Would you like to see it one more time? You may have blinked and missed it!" quipped Tim Cook, the chief executive officer of Apple Inc., while launching the company’s near field communications-based (NFC-based) Apple Pay service on 9 September 2014. Apple may have been a latecomer to the NFC jamboree but these words more or less sum up the essence and importance of the technology. NFC has been slowly moving towards revolutionising not just the way you will pay but also how you will shop, save and interact with other mobile devices as well as physical objects for almost a decade now. That’s right, the first NFC-enabled phone—the Nokia 6131—debuted way back in 2006.

The Grand NFC Dream envisions a world where you need no credit cards, no loyalty cards, no physical train passes or bus tickets—or any complicated passwords and tricky PIN numbers to memorize either. All you require to make payments—among other things—is your smartphone. A mere tap or extreme proximity of the phone to a contactless payment terminal in a shop, cafe or station identifies your account and other details and charges you via an app on your mobile.

To rewind a bit, as the name suggests, NFC is a type of contactless communication technology between mobile devices like smartphones or tablets and an NFC tag embedded a card reader, a smart poster or even an advertisement. (The last two are possible because no power or battery is required in the device being read. The mobile device obviously must have an NFC radio.) An offshoot of radio-frequency identification (RFID), the technology can be used to retrieve information, and exchange data files on the go as well.

The difference between NFC and already ubiquitous technologies like WiFi and Bluetooth is that while the former uses electromagnetic radio fields to communicate, the latter employ radio transmissions. And unlike WiFi or even Bluetooth, the NFC communication standard is meant only for transmitting small amounts of data across very short distances. In fact, proximity is a vital ingredient and that is what makes the technology more secure. NFC-enabled devices can only communicate when they are within 4cm of each other—or come in touch with one another.

Ruefully, technology vectors are one thing and stark realities quite another. Even with such obvious advantages of security, ease of use and versatility, NFC hasn’t become as pervasive as it should have been. Despite flashes of periodic enthusiasm, the technology has continued to lurk on the periphery of communications for years now, unable to get the impetus it deserves to become a mainstream medium of data exchange. Way back in 2012, tech pundits were emphatic in pronouncing that NFC and mobile payments would be the preferred medium of fiscal transactions in almost half the smartphones by 2015.

Not for lack of trying either. Apple is known to be a big driver of new standards. And till last year, it was a prime player in the smartphone market that chose to stay away from NFC for a long time. While iPhone 6 and 6 Plus added an NFC radio last year, it is still limited to use only with Apple Pay. Now Apple Pay has been around for over a year with more than 700,000 retail locations as well over 100 banks supporting it. However, as per data from Kantar Worldpanel ComTech, a leading consumer knowledge and insights firm, barely 15% of iPhone 6 users have actually tried Apple Pay.

It has not been about payment mechanisms alone. Creative nerds have ensured that there are loads of ways NFC can simplify our lives. For example, a wee NFC tag at the main door of the house can easily turn on the light, WiFi, your TV or your music system while switching off Bluetooth and swapping phone profiles the moment you enter your home. You don’t need a hefty home automation system for this. A pre-programmed NFC tag will do the trick.

Late last year, Deloitte predicted that 2015 would be an inflection point for NFC. According to the company, larger banks were likely to offer NFC payments via smartphones by the end of 2015, with 5% of NFC-enabled phones being used for contactless payments by the end of the year. It so happens that Citigroup Inc. is currently testing a screenless, cardless ATM (automated teller machine) concept that lets customers authenticate themselves and make transactions via their NFC-enabled mobiles instead of a plastic card.

It appears that entrepreneur, investor and technologist Vinod Khosla is closer to the actual facts. As he opined a couple of weeks ago, NFC will take over EMV payments in the next three to five years. EMV is currently the global standard for credit and debit payment cards based on chip-card technology named after Europay, MasterCard and Visa.

Evidently, it seems that the technology is quite baked and ready, but the user isn’t so hungry. Not just yet.

Ashish Bhatia is an independent technology writer.

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Updated: 24 Nov 2015, 01:39 AM IST
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