A case in point is
NFC, as the name implies, is a very short-range radio technology. It is designed to work over a distance of just a few centimeters or so. If you've used Mobil Oil's Speedpass, you have a general idea of what's involved here. Speedpass allows you to purchase gasoline just by waving a radio token at the pump. The token, usually kept on a key ring, is linked to a credit card, and that's that.
But suppose, as the proponents of NFC envision, we embed a "universal" token in a cell phone handset and then use that radio device for all financial transactions – the handset thus becoming a virtual credit card. That's the core idea behind NFC: a universal standard for transactional (as opposed to networking) services. As it turns out, NFC is the evolution of another wireless technology, known as "contactless smart cards", which has achieved a degree of success in Europe. NFC is in fact backwards compatible with existing contactless smart card infrastructures, and though NFC overlaps RFID to some degree, there's one big difference.
That difference is that NFC is capable of fairly high data rates -- up to about 500 Kbps --- again, over very short distances. But this allows the possibility of rather elaborate transactions, such as sending lengthy security keys or other authentication information with very little latency. This means that the security of financial and other transactions could be significantly enhanced and that your cell phone could be the key -- quite literally -- to banking transactions, purchasing/credit transactions, and even your house and car. And, of course, NFC can also be used for quick-and-dirty file transfer and related operations, just like Bluetooth (and many others).
This once again raises the question of whether NFC can make it in the market. The proponents have formed a trade association, the NFC Forum, to do the vital marketing work required. There are also a few non-marketing issues, mostly relating to the physical real estate required in the handsets for the NFC components and whether the cell phone vendors will adopt the technology regardless. As with many such technologies, both a client and an infrastructure side are required, and one might wait forever for the other unless someone took the lead -- as Intel is doing with WiMAX, for example, both developing client components and investing in service providers.
It's too early to predict the future of NFC. But I'm intrigued, and with the right support from the financial community, NFC could be a winner.
This was first published in October 2006