What is NFC?

Marc Castrechini |

July 5, 2012

Near Field Communications

Industry analysts predict that 50 percent of smartphones will be NFC (near-field communication) enabled by 2015. In that same year, it’s anticipated that NFC-facilitated transactions will reach US$74 billion. Last year, 30 million NFC-enabled handsets, from leading manufacturers including LG, Nokia, Samsung, and SONY shipped worldwide and Apple is rumored to be including NFC in the forthcoming iPhone 5. Without a doubt, NFC is gaining traction as a leading technology in mobile payments.

NFC enabled smartphones feature self-contained microchips that facilitate wireless information transmission when in close proximity to a contactless terminal or customer engagement device. Mobile wallet providers, such as Google and ISIS leverage NFC for in-store payment transactions. Only time will tell if Apple’s rumored iWallet will leverage NFC technology and the myriad of new mobile wallet technologies converging on the marketplace.

In a retail environment, NFC provides the merchant and the customer with the added benefits of increased security, enhanced loyalty and marketing capacity, and an expedited checkout. Using an NFC enabled smartphone; the customer simply selects their mobile wallet and loyalty, if applicable, and taps their phone on the merchant’s contactless device. At the point of tap, the phone enters secure card emulation mode, accessing the secure element for the customer’s selected account information, and that information is transmitted through the payment device and processed. While it may sound complicated, the entire process occurs within seconds.

While NFC provides the customer with the benefit of having a consolidated application for payment and loyalty and a quicker checkout process, it also offers the merchant with additional opportunities around targeted marketing, couponing and more.

While NFC is just one piece of the payments puzzle, it is definitely one that cannot be ignored.

New mobile applications continue to enter the payments marketplace servicing a wide variety of needs for merchants and consumers alike. With dozens of entries flooding the space each month, it’s our goal with, what has now become our ‘What Is’ series, to provide brief overviews of many of the new apps available. Giving merchants and developers an up-to-date look at the opportunities and technology currently available to them in the market today.