NFC, What's it All About
What is NFC really?
NFC is a technology that is being integrated into mobile phones which allows consumers to make things happen just by placing their smartphone very close to objects like payment terminals, some credit cards, or specially prepared posters on walls. NFC can be integrated in many other devices but the smartphone is the most important right now.
It belongs to the generation of technologies which allows consumers with no particular technical skills to easily access the power and benefits that technology can bring, in the same way that the Nintendo’s Wii or the Microsoft’s Kinect allowed millions of people to access the power of gaming consoles just by moving.
Most existing material on NFC describes it in technical terms as a Radio Frequency technology (RF), or by concentrating on one possible use of NFC: mobile payment. Although both of these descriptions are true they are not particularly helpful in understanding the potential of NFC in retail commerce.
Firstly there are many incompatible variations of RF technology using different frequencies and protocols. The use of RF by large supermarket chains and an increasing number of apparel retailers to automate their logistics is based on an RF technology which is different and incompatible with NFC. NFC-Shopping is about changing the consumer shopping experience, not about the retail logistics.
An NFC smartphone can be used in three different ways:
- Like a contactless card for payment, travel, loyalty or access control. This is referred to as Card Emulation. The most common example is using the smartphone just like a contactless payment card such as Visa Wave or MasterCard PayPass.
- To automatically read an NFC tag just by holding an NFC smartphone very close. This action is often called tapping. An example of how this could be used in retail is putting an NFC tag in price labels. When consumers tap the price label with their phone information about the product can be displayed. This is referred to as tag reading and is at the heart of NFC-Shopping and we will explain this in detail further on in this white paper. Another useful and increasingly common application of tag reading is to automatically connect a smartphone and some other device through a Bluetooth or a Wi-Fi Direct connection. Just tap your smartphone on your headset and speakers to listen to your music. Just tap your smartphone on your television or media center to watch your videos or backup your photos.
- To react to another NFC smartphone just by placing them both very close together. This is referred to as P2P (Peer-to-Peer). An easy example is people exchanging phone numbers just by placing their phones together. This has been widely shown in photo and video sharing in commercials for Samsung’s flagship Galaxy S III smartphone.
We have detailed here a few examples of how NFC could be used, but NFC is rather like the mouse on the PC. It changes the way the smartphone is used, making it available for more people to perform more useful tasks because it makes the smartphone easier to use. NFC changes the way consumers will use smartphones because they will be able to do useful things just by tapping their smartphone. When that is applied to the retail industry, you have NFC-Shopping.
How rapidly is NFC being deployed?
NFC is not a new technology. Its origins go back to patents filed in the 1980’s. The push from major players started in 2004 and the first NFC phone, the Nokia 6131, was launched in 2006 with very limited diffusion but was used in a large number of successful trials.
A turning point came in December 2010 when Google launched their Nexus S phone and actively backed support for NFC in their Android OS. In 2012 all major smartphone manufacturers expect Apple have launched a range of NFC phones. In fact NFC has become a standard feature in almost all new smartphones. Industry experts agree that with the rapid evolution of the NFC ecosystem Apple cannot afford to push NFC adoption out to 2014 so it is almost certain that the 2013 vintage iPhone will join the NFC revolution. In the meantime a number of devices are available to add NFC to existing iPhones.
The use of NFC goes beyond smartphones. An increasing range of devices and equipment now integrate NFC including tablets, laptops, cameras, speakers, headsets, televisions, cookers, washing machines, deep freezers, cars and vending machines.
In France, Europe’s most advanced country for NFC, there are already 2.5 million NFC smartphones in the hands of consumers at the beginning of 2013. That’s over 10% of the smartphones in use. In Korea, the world’s most advanced country for NFC 40% of the population already have an NFC smartphone.
There were 140 million NFC smartphones in the world in 2012. Another 285 million will join them in 2013. The number of models of NFC smartphones available on the market has increased rapidly especially in the last six months of 2012.
After years of a gradual build up and waiting on the side lines major players are no longer worried about being the first, they are more worried about not being the last. A tipping point has been reached which makes NFC deployment obvious.