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Jumping on the NFC Bandwagon

Several vendors are developing and marketing products that extend the capabilities of Near Field Communication technology.
By Bob Violino
May 04, 2009—Near Field Communication (NFC) is a short-range, high-frequency (13.56 MHz) wireless technology that allows for the exchange of data between two NFC-enabled devices, such as mobile phones, over a distance of a few centimeters. Among the applications enabled by NFC are contactless transactions for payment and transit ticketing, simple data transfers and access to online content. It's one of the fastest-growing wireless technologies, and now a number of vendors are launching products that extend its capabilities.

In addition to mobile phones, a variety of devices and machines can be NFC-enabled, according to the NFC Forum, a Wakefield, Mass., organization formed in 2004 to advance the use of NFC technology, ensure interoperability among devices and services, and educate the market regarding NFC. These include cash registers or other point-of-sale (POS) equipment, vending machines, turnstiles, parking meters, ATMs and PCs. The technology can also be used with posters, street signs and other public points of interest, certificates, food packaging and other items.

The TazCard, a handheld tablet in a credit card format, features a touch screen and fingerprint-based biometric authentication, communicates via NFC, USB and ZigBee technologies, and is designed to save and transmit personal data in a secure manner.

The use of NFC technology is growing, says Peter Preuss, the NFC Forum's marketing chair and a senior manager at Nokia. NFC devices are being used in more than 65 projects worldwide, he explains, enabling users to make payments and access bus gates. A 2008 study conducted by ABI Research found that more than 419 million NFC chipsets will be shipped by 2012, and that NFC chipset shipments and revenue will continue growing steadily over the next five years, as the market adapts to the new technology.

In November 2008, the GSM Association (GSMA), a global organization comprising licensed GSM mobile network operators and the technology vendors that serve them, called on mobile phone manufacturers to include an NFC chip with a single-wire protocol and a subscriber identity module (SIM) chip in all commercially available handsets they make by the middle of 2009. The association said this would "ensure that consumers can reap the benefits of mobile payment services as soon as possible."

The announcement was designed to stimulate the worldwide use of NFC phones. According to GSMA, a series of operator trials, under the organization's Pay-Buy-Mobile initiative, have shown that consumers can use NFC handsets to quickly, easily and securely pay for goods and services in stores, restaurants and train stations. The Pay-Buy-Mobile trials took place in nine nations: Australia, Canada, France, Japan, Korea, Malaysia, Taiwan, Turkey and the United States; further pilots are currently planned across 14 additional countries.

"There is a huge latent demand for a large variety of mobile transaction services," says Rob Conway, GSMA's CEO, "of which there is universal interest in proximity payments, as trials across the world have already shown." Conway says the organization is committed to ensuring that mobile payment services are delivered as efficiently and cost-effectively as possible, adding, "but this will require device manufacturers to make sure that the vast majority of commercially available handsets incorporate the single-wire protocol and [NFC] features as standard." That, he notes, would allow the industry to leverage significant economies of scale and ensure greater accessibility of NFC services for mobile users.

But some vendors say the market has been slow to emerge because device makers do not want additional costs, and consumers don't want to purchase new devices. These companies have been keeping a close watch on NFC's potential and are now developing and marketing NFC-enabled products that they believe will help support the growth of NFC adoption among consumers.
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