NFC: More than Just Mobile Payments

Are you one of those consumers who taps a smartphone against that special payment terminal at the checkout counter, instantly paying for those new shoes or the cart full of groceries?

No? You’re not alone.

Mobile payments is an idea that’s been talked about and tested for some time now but just hasn’t generated the traction that might be expected, especially given the infatuation that today’s consumers have with their beloved smartphones. But now, a technology that’s behind mobile payments is starting to make its way into the hands of consumers, via a new wave of smartphones, including Google-powered Android phones that run Broadcom’s NFC software stack.

The technology, called Near Field Communication, or NFC, powers a secure and temporary short-range connection between two devices through a simple tap. In the video below, Richard Ybarra, wireless LAN product manager in the Mobile & Wireless Group at Broadcom, demonstrates how mobile payments work with Near Field Communication technology. Using a Google Nexus tablet and smartphone, Ybarra shows how easy it is to pay for an item by tapping together the two mobile devices.

It may be convenient and easy to use – but consumers can be fickle when it comes to new ideas, especially when it involves a new use of the device (tapping) to access something so precious to them (their bank accounts and credit cards). That’s why it’s important to note that these tap-and-go data transfers enabled by NFC technology don’t have to involve financial payments.

Indeed, before NFC can take off as a mainstream payment method, consumers may need to establish their comfort levels by using NFC in other contexts, touching their devices to other electronics for other purposes, said Mohamed Awad, director of product marketing in the Mobile & Wireless Group at Broadcom and vice chair for the NFC Forum.

In a blog post, GigaOm’s Kevin C. Tofel explains that, for some product categories, NFC is a better choice for pairing devices because it eliminates the need for a PIN to connect them, as is done with many Bluetooth connections.

“Bluetooth radios have a range of 10 meters or more so anyone in that radius could theoretically attempt to pair their device with one of yours over Bluetooth,” he wrote. “That’s why when you pair Bluetooth devices, you’re provided with a simple PIN to authenticate the connection. But the “N” in NFC stands for near and that makes all the difference: Why require a PIN when two devices are placed within an inch or two of each other?”

Consumers are already comfortable sharing photos with others over the Internet so the idea of tapping to copy an image from one phone to another becomes enticing. Likewise, tapping a printer to get a file from the screen to paper – without having to configure a permanent printer connection – is a function of NFC. Even syncing up a multiplayer mobile gaming team or scanning a product for an in-store promo are all NFC-powered activities that are available today.

If they can grow accustomed to tapping the device to a printer, they may be comfortable doing so to pay the parking meter, instead of fumbling for coins, just as drivers in San Francisco are now able to do with the city’s 30,000 meters. Over time, consumers may instinctively reach for a smartphone instead of a debit card to pay for groceries.

Still, no one is expecting widespread overnight switch from credit and debit cards, checks or even cash to mobile payments. The rise of debit cards and PayPal has certainly reduced the use of paper checks as a form of payment, but checks continue to be used by many. NFC as a mobile electronic payment technology is going to be just one tool in future shoppers’ on-the-go arsenals, according to Broadcom’s Awad.

“Everyone wants to know what’s going to win, but the truth is it’s going to be a mix of things: mobile wallet and credit cards, checks and cash — they can coexist,” he said.

Showing consumers the power of using the tap is only one way to make them more comfortable with mobile payments. Creative uses, with enticing offers as bait, could be the key to luring new users into the mobile payment ecosystem. Combining NFC technology with other useful smartphone features, such as location-based GPS services, could yield highly targeted advertising and promotional offers for interested shoppers.

If you walked into a grocery store and received an alert about additional savings for using NFC to conduct your transactions, you might be willing to give it a try. Several retailers are already trying out these sorts of campaigns.

Now that the technology is ready for prime time and soon to be widely available, it becomes more cost efficient for companies to invest in it and easier for consumers to test it. British Airways, for example, is testing luggage tags with barcodes that can be updated using an NFC phone app for each flight as a way of reducing wait times at airports. Also in the UK, media conglomerate Clear Channel lets bus riders enter contests by tapping NFC-enabled touchpoints at bus stops.

NFC technology is here to stay. And while mobile payments may be the Holy Grail application for retail marketers looking to hook smartphone-savvy shoppers, consumers need other ways to use the technology before they cozy up to mobile payments. Luckily, the technology is flexible enough that everyone has a chance to give it a test drive.

About the Author

Rachel Rosmarin is the chief trade show correspondent for Broadcom. Her technology reporting experience goes back a decade to the dawn of Wi-Fi, smartphones and the Mp3. She has an in-depth knowledge… More