This is page 2 of:
NFC Should Stand For “Needs Further Clarification”
And now back to Earth with a thud. Currently, a number of solutions in the market are based around RFID stickers, RFID SD cards and even 2D barcodes purporting to be NFC. If these options do not integrate with the phone, do not use radio frequency technology and have no means of providing any functionality beyond card emulation, then they are not NFC. Let’s call them what they are—contactless. And a contactless sticker attached to a phone does not make it an NFC phone any more than a contactless sticker attached to my dog makes him an NFC dog.
We’ve been down this road before. A pure payment play for contactless cards and other form factors was introduced a few years ago and failed because of the weak value proposition for merchants and consumers. Tapping a card was, and still is, not materially faster for the consumer than swiping a card—particularly in a signature waiver environment. Contactless add-ons to the periphery of a mobile phone are no different. Same value proposition, different shape (again, if all you have is a hammer—you get the idea).
However, there is some light at the end of the tunnel. Orange France is going national with NFC handsets in 2011, and Nokia has announced that all new smartphones as of 2011 will have the technology embedded. It is a trickle, not a flood. But there is momentum at a level that is beyond card-esque science projects. And these vendors truly get the big picture—that the value proposition is greater than just credit or debit card substitution.
But if banks, card networks and even mobile operators continue to push just card emulating contactless as NFC, then the broader and ultimately more valuable proposition will be harder to reach. Consumers need much more than simple wallet substitution, which, incidentally, the mobile phone won’t replace anytime soon. They will still need a receptacle for those plastic rectangles that allow them to pay in the majority of non-contactless retail locations for the foreseeable future.
NFC is Not Far, Clearly. And the value proposition could be immensely compelling if it’s well executed. Let’s just hope the acronym will still mean something beyond “payment card” by the time the true vision reaches mass market. Disagree? Please reach out to Nick and share your thoughts.
-Marc
September 30th, 2010 at 10:05 am
Great points. NFC is beginning to look a lot like biometrics. Use you finger (or in this case NFC sticker, or NFC phone chip) and “leave the wallet at home”? Never going to happen. You still need your driver’s license for ID whether you drive to a store or not. Until retailers or card brands pay the extra expense to fully deploy NFC readers in the store, we are forever left with “chicken & egg” dilemma and still no consumer adoption. Also, I saw a report on thieves using cheap NFC readers on the street, waving them past purses & wallets to capture embedded card info for malicious use. Even if NFC becomes the golden goose, consumers are still going to cautious. All the attempts are great, but someone needs to invest more heavily before we all see a newly born chicken from that egg.
September 30th, 2010 at 6:12 pm
Nick, Excellent point – if not an obvious one to those following NfC and that is that the payment angle is such a fractional part of the big value adder of NFC.
I think to myself that surely industry companies that are known for their leadership and creativity as Apple and Google see this potential and are working on something?
October 1st, 2010 at 11:26 am
Agreed, NFC User! I suspect we may well see a play from Apple / PayPal in this area. PayPal in particular…
October 3rd, 2010 at 8:45 pm
Being involved in the development of NFC/Contactless terminals including the Lenovo contactless module, I have seen this exact problem happening. Also being involved with the NFC Forum, it is something that we are trying to communicate through there as well.
I am a huge supporter of NFC and what it can accomplish by using its three modes.
In relation to Rob Rice’s comment about still requiring your drivers licence, here in Japan the new drivers licence (and I believe the Alien Registration Cards and National Health Cards will soon have this) are all contactless cards based on ISO 14443 Type B, which is covered by the broader range of NFC (ISO 14443 A & B, JIS-X6319/FeliCa). So potentially you could use your NFC Device as your drivers licence.
And a friend of mine once said that NFC is a woman’s best friends, just think of how many point cards/loyalty cards you could take with you when you went shopping.
Great article.
October 7th, 2010 at 8:50 am
Good article – “Needs Further Clarification” is right. Inevitably when I use my card as contactless I get one of two responses from the clerk. I’ll usually either hear, “oh, sorry, that thing doesn’t work – let me have your card,” or they will say, “Wow, you are the first person I’ve ever seen actually use that thing.”
I can only imagine how confused the clerk would be if I whip out a cell phone and try to tap the contactless reader with it – they will probably call security!
There is still a long way to go…
October 31st, 2010 at 4:43 am
Just two question:
1. Peter C did in Japan already solve problem about NFC facial recognition? I mean: you can put driver license on a SecureElement on a NFC phone, but it seems to me that there is no way for a policeman to check if the secure element belongs to you except if you have an ID card with you (again chicken -egg problem) and he can check your ID with a contactless reader (but without “reading” your picture frome the SE… to long time needed for data transfer.
2. An NFC “only contactless” payment card has the problem on how to pay or withdraw money where there is no contactless signal (POS or ATM). The only viable solution is to have a dual interface card (contact+contactless). But in NFC is not possible. So during transiton time from contact+contactles payment/loyalty infrastructure to a full contactless infrastructure, users should always have their old contact card. And it will last years. So a long way before NFC will become a woman’s best friend…
October 31st, 2010 at 5:29 am
sorry, I’ve just read second page of article, so my point 2) is not necessary. Already written … :)).