Today we’re looking at Near Field Communications or NFC for short and how it’s affecting the mobile payment market.
According to Wikipedia Near Field Communication (NFC) is defined as “a set of standards for smartphones and similar devices to establish radio communication with each other by touching them together or bringing them into close proximity, usually no more than a few centimeters. Present and anticipated applications include contactless transactions, data exchange, and simplified setup of more complex communications.”
The service is becoming extremely popular as a payment tool in an attempt to replace the plastic card in your pocket with your mobile phone. As an example you can link your credit, debit or prepaid card to your mobile phone and then pay. A great example is the MasterCard PayPass service, which is a contactless payment feature that provides cardholders with a simpler way to pay. Now, you can simply tap your card, key fob or cell phone, on a point-of-sale terminal reader to pay. It works just like your traditional MasterCard payment card-but no more swiping or giving your card to cashiers.
NFC is starting to become established in the UK. Orange’s QuickTap scheme allows purchases of £15 at 50,000 shops in the UK (including Wembley Arena, Subway and McDonalds) just by tapping a phone, though only from NFC-enabled phones hosting an app that has been topped-up with credit.
NFC is only going to get bigger with analysts predicting a minimum of 285 million mobile and consumer electronics devices will ship in 2013 and the base of NFC enabled devices hitting 500 million by the end of the year.
In South Africa there are small trials going on although the phone manufacturers, mobile providers or banks, have announced nothing substantial.
• One device for all your payments
• Safe and secure even if your phone is stolen (you need a pin for the app)
• Could be great for public transport. Just tap your phone and get onboard
• Have to get very close to other device or payment point to process a payment
• Costly for a merchant to adapt their entire payment infrastructure to accommodate NFC