Near Field Communications – the next big thing?

So, is this the next new thing in the mobile revolution that most of us presently experiencing? I think so. There’s a lot happening in this space – technology development, ecosystem enablement, solution deployment and monetization among other things.

Well, the technology is rather simple, but the implications are very profound. If you have been following the RFID world, there was and is talk about the mass proliferation of RFID especially in retail in the form of tags to help track inventory, sales, enable efficient supply chain, and prevent theft among many other aspects. While RFID and its variants is establishing itself as a force in the asset tracking industry, we still have not felt its impact as cost efficiencies have not yet been achieved. Until now!

With the cell phone in pretty much everyone’s pocket, it is just a matter of time that we will begin to interact with the 13.56Mhz signal – better known as the frequency that will allow for NFC (Near Field Communication) to take place. And here’s how it works, cell phones (Google’s Nexus S for example) will be equipped with NFC chipset(s) that essentially will serve as passive RFID tag that will contain relevant information (such as your credit card number, auth-codes etc). You may have used a secure app to enter all of this information. At the retail POS, when you tap your cell phone against the active RFID reader, several things happen.

  1. The tag in the cell phone cuts across an electromagnetic field created by the active RFID reader.
  2. Lenz’s law kicks in causing induced current to be generated in the passive RFID device embedded in the cell phone.
  3. The current generated powers the loop antenna to transmit your payment information at 13.56 MHz.
  4. The receiver in the active RFID reader reads this information and communicates the same to the POS which eventually triggers the credit/debit to be applied to your purchase.

As the name implies, devices engaging in NFC need to be located in close proximity to enable viable data transfer between them. So, yeah all of this sounds interesting, but what are some usage models. Well, here are some.. 

  1.  NFC may quite well eclipse the popularity of QR codes. Google recently put its all of its weight behind NFC that took some significant wind off the QR sails. In the future, I suspect a lot of ad-dollars are going to flow through NFC. NFC based posters; signage(s) etc are poised to take off.  
  2. Mobile Ticketing – It’s already in place in several countries. In South Korea, subway travelers pay using their cell phones. Turnstiles in the station open with just a tap from the cell phone. Ticketing infrastructure has been simplified and travelers can easily keep track of their credits.
  3. Mobile Payments – Simple! Pay using your cell phone.  
  4. Mobile Banking – Engage in secure banking from your cell phone. Transfer funds, deposit checks (using Mobitography, BTW), make payments etc.
  5. Identity Card – NFC can be used to enable phones to be your mobile-identity. You may not need a badge at work anymore!

I am just scratching the surface with usage models. There are many more that are yet to be discovered. And there’s a lot of activity taking place in the NFC arena today, so, expect to hear more.

In my next piece, I’ll cover some more detail about NFC – the market opportunity, the ecosystem around NFC and maybe a few thoughts on how NFC could be monetized. Do you have any thoughts about NFC? If so, feel free to put forth your thoughts.

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15 Responses to Near Field Communications – the next big thing?

  1. Pingback: NFC in phones: what you need to know « Near Field Communications

  2. Smart Poster says:

    Great article. One of the uses of Near Field Communication will be Smart Posters that will allow marketing companies and brands to better connect with customers using pull rather that intrusive push strategies. Consumers will connect with marketing messages when and where they want, they will be able to access discount coupons, special deals and participate in loyalty programmes. By connecting their NFC enable smart phones with these interactive smart posters they can get product information and details of the nearest store or be encourage to visit online stores. The data captured by marketing companies will allow for better targetted marketing initiaves.

    • @ Smart Poster – thanks for your comment.

      And you are right! Smart posters will literally allow users to actively engage with advertising (and advertisers) opening up a new channel with tons of opportunities some of which you mention. More importantly, this engagement with advertisements is something marketers crave for and no doubt this will open up a new channel for monetization. I’ll touch upon this in my next blog article.

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