Near Field Communication (NFC) is being used in volume only in Japan, where Sony benefits from its FeLiCa chips, installed in many brands of phone, and used to trigger all manner of financial transactions ‘ from buying a newspaper, paying for a train ticket and granting access to a concert. It has become the technology whereby a simple ‘touch’ of your phone, authorizes payment or entry. It is gradually being used as a credit card along with its own pin number.
In Europe NFC uses some mildly different technology and been about to take off for the pasty 10 years, with the promise of handsets that act as mobile payments cards always hovering just over the horizon.
There have rows over standards and security, and limited interest from some phonemakers, which has made progress slow, but Apple may be about to give NFC a kickstart in the US.
The reason for the optimism is simply because of a hire, Apple has bought on board Benjamin Vigier, a well known expert in the NFC standard for contactless payments, as its new product manager for mobile commerce, creating a tide of speculation that the firm plans to include NFC in future iPhones.
This would fit in with Apple’s known interest in mobile commerce, as well as the need for ‘iPhone 5’ to make some significant leaps ahead of increasingly effective competition from Android vendors. Apple has secured several patents in the area of mobile commerce, including one covering the use of an iPhone as an electronic wallet and payment system for settling bills; and another, from last month, describing a system to use NFC functionality in the iPhone to research products. Apple is also said to have tested the other main ‘swipe’ technology, RFID or smart barcodes, in a prototype iPhone.
Knowing Apple, it would look beyond devices and seek to play a significant role in the payments chain, as well as boosting iPhone and iPad functionality. The company was last year reported to be working on its own digital payments platform, which would enable iTunes and App Store account holders to make purchases at participating retailers across the web using the same details and user interface. This could potentially be extended to physical goods and services with the addition of integrated NFC, and allow for similar co-branding and marketing initiatives with participating retailers.
Vigier has been working on NFC platforms since 2004, according to NFC World, and has been responsible for such activities at French cellco Bouygues Telecom and flash memory maker Sandisk. His most recent job was as the product manager for mobile wallet and NFC at US mobile payments specialist, mFoundry. There, he was responsible for a number of projects, such as Starbucks Card Mobile, Paypal Mobile and Sprint MyMoneyManager.
And just to add to the buzz around NFC this week, China Unicom has signed a $1.5 billion deal with the Chongqing Municipal Government to make it the center for the operator’s NFC services development. The regional government will offer tax breaks and other incentives to encourage other NFC developers to move into the area and create a hi-tech cluster and center of excellence, into which Unicom can tap for its own future services.
Embedding contactless payments technology into phones, allowing them to pay for goods with a swipe over a terminal, has only found significant uptake in a few markets so far, notably Japan. Nokia has been the most enthusiastic handset supporter but many of its activities have focused on emerging markets and it has incorporated NFC in several low end cellphones. It has hinted it will include NFC in a wider range of products soon and the 2012 Olympics in London has threatened to use NFC for ticketing but that might be with cards, rather than phones. Which is perhaps why Nokia also has plans to have it in all smartphones and many featurephones by the end of next year (previously it had said the smartphone NFC user experience was inadequate, unless using a proprietary implementation like Sony’s FeliCa for DoCoMo in Japan).
So NFC does look to be going mainstream now, especially as it is increasingly integrated with SIM cards to address identity and security issues. Broadcom recently acquired Innovision, a UK-based NFC and RFID specialist, and Samsung has an NFC-enabled handset, the Player One, now in trials with Orange France. But there is still time for Apple to steal all the headlines and make it look to the consumer like it invented the technology by embracing it the most aggressively, first.