Near-Field Communication: Fad or phase?

In recent months, NFC (Near-Field Communication) has become a bit of a buzzword. NFC allows compatible devices, brought in close proximity to one another, to exchange data such as contacts, media files and other information. It is most commonly used as a form of cashless payment. It is similar to Bluetooth, but only slower – and does not require pairing.

NFC is most commonly used in developed nations as a form of cashless payment (image credit: NFC Blog)

Handsets like Samsung’s Galaxy SIII, HTC One X, LG Optimus and certain Sony Xperia phones have NFC built in, but Apple decided not to incorporate the technology into the iPhone 5 – a move which some users find quite peculiar.

So, the incorporation and omission of NFC into two of the most popular and best-selling mobile handsets (the Samsung Galaxy SIII and the iPhone 5 respectively) begs the question: is the technology here to stay, or is it merely a gimmick?

Other questions come to mind: Is there really a need for such a service? Will it be used practically? Will Apple’s refusal to incorporate the feature single-handedly kill the technology?
NFC makes use of Radio-frequency identification (RFID), which is not a new technology by any stretch of the imagination.

The first patent to be associated with the abbreviation RFID was granted to Charles Walton in 1983. In 2006 Nokia launched the first NFC-enabled phone, the Nokia 6131 and the first Android phone to use NFC was the Samsung Nexus S two years ago.
The word NFC is actually a bit of a misnomer, as “the Android Beam software uses NFC to automatically complete the steps of enabling, pairing and establishing a Bluetooth connection when doing a file transfer. Nokia has used NFC technology to pair Bluetooth headsets and speakers with one tap in its NFC-enabled devices,” according to Wikipedia.
NFC Tags work in conjunction with NFC phones, where users are able to program these electronic discs (NFC Tags) to enable certain commands once contact is made with enabled devices. Commands can vary from switching on Wi-Fi when entering a building, or enabling a hands-free kit when getting into a car. In cashless payments, the technology is coupled to an e-Wallet, which allows a payment to be deducted from the wallet by means of NFC.

But NFC tags need to be programmed and not everyone is capable of doing so – making it impractical for the average user. And no user would like to see a bunch of electronic stickers scattered around their house.
With a little bit (actually a lot) of technology know-how, users will be able to program NFC Tags to unlock doors without a key; a company called Lockitron sells NFC door locks which lets users do exactly that, but at $300 per installation, it is a little beyond the average person’s reach.

So while the technology seems to have many uses, the adoption rate has been very slow. In total, only about ten mobile handset manufactures have actively opted to include the feature in their devices. For payments, there also needs to be adoption by merchants who are willing to install NFC payment systems – which could be a hindrance.

The low rate of adoption is reportedly, one of the main reasons why Apple declined to incorporate NFC in the iPhone 5. Another reason for its omission is its effect on battery life.

“Apple engineers experimented with both NFC and Bluetooth 4.0 Low Energy options, but were concerned that the inclusion of an NFC chip and its antenna would adversely affect battery life. The slow rate of NFC’s adoption was also said to be an issue, with Apple hesitant to adopt a technology that would only be available at a small number of retailers,” writes The Wall Street Journal.

In the comment section of technology website The Verge, a user agrees that if Apple goes against the grain, the market is sure to follow. “It’s really too bad they’re choosing not to adopt NFC. Like it or not, when Apple does something, the whole market tags along as well. We would have definitely started seeing many, many more NFC-enabled services,” says Cortez de Lobao.

According to a Forrester Research report, NFC adoption is still a few years off and the key driver will be education and experimentation. “The key long-term driver for NFC technology is that it can enable many new product and service experiences beyond just mobile contactless payments. The list of new use cases is long: convenient transport experiences, next-generation shopping experiences, authentication and identity management solutions, or immersive marketing experiences,” writes Forrester Analyst Thomas Husson.

He also added that “Turning adoption into mass-market usage among consumers will require not only a lot of market education but also, more importantly, the construction of a value proposition for consumers and merchants that goes well beyond convenience and speed to adding value to the entire commerce process.”

Whether or not NFC will become a mainstream and widely-used technology is a difficult question to answer, as many factors play a role in the adoption of a new technology. While it might not entirely hinge on Apple’s attitude towards it, NFC is definitely still in its infancy and could possibly evolve into something worthwhile in the next couple of years.

The reason for Apple’s reluctance, in part, is the fact that they are looking at building their own NFC-like technology, and so too is Microsoft and mobile service provider Sprint.

In a couple of years from now, we might see the emergence of technology that has evolved out of the current NFC standard. But for the time being, NFC is not shaking up the market. NFC adoption hinges on three factors: the willingness of manufacturers to embrace the technology, users who are willing to use the technology, and merchants who see a need to install the cashless NFC payment option.

Should any one of these factors fail to materialise, NFC might disappear.

Are you using NFC? What are your thoughts on the technology? Leave us a comment about it in the box below.

Charlie Fripp – Consumer Tech editor