What is NFC and why is it in your phone?

16th Jan 2013 | 10:00

What is NFC and why is it in your phone?

NFC is coming to the UK - but what can you do with it?

Your credit cards: gone. Bus pass and train tickets: vanished. Those dog-eared loyalty cards for high street coffee shops: binned.

You've been the victim not of theft, but of the future – a future where the wallet, purse, paper ticket and pocket have all gone digital and live solely on your phone.

Welcome to Near Field Communications (NFC), a contactless, Wi-Fi-lite style tech that could already be in your smartphone, and could soon be a regular feature of your commute.

How does NFC work?

At its core, all NFC is doing is identifying us, and our bank account, to a computer. The technology is simple. It's a short-range, low power wireless link evolved from radio-frequency identification (RFID) tech that can transfer small amounts of data between two devices held a few centimeters from each other.

Unlike Bluetooth, no pairing code is needed, and because it's very low power, no battery in the device being read. By tapping your phone on a contactless payment terminal in a shop, train station or coffee shop is able to identify your account (and even your personal preferences, shopping habits and even your most frequently travelled route home) and takes payment through an app on your phone.

Passive NFC 'tags' on posters, in shops and on trains could contain a web address, a discount voucher, a map or a bus timetable that passers-by could touch their phones on to receive – or to instantly pay for absolutely anything.

"The SIM card in your mobile phone is a smart card identifying your account to the network," says John Elliott, Head of Public Sector at Consult Hyperion, who's worked on the Oyster Card. "On NFC phones, the SIM is being extended to act as the Secure Element that can hold other apps such as payment cards."

Those with NFC smartphones on Orange can already 'pay 'n' wave' on Stagecoach buses

Is NFC available in the UK?

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 Pret a Manger, EAT, Little Chef, Wembley Arena, Subway, Wilkinson and McDonalds) just by tapping a phone, though only from NFC-enabled phones hosting an app that has been topped-up with credit from a Barclaycard, Barclays debit or Orange Credit Card.

"Feedback from our customers on the QuickTap NFC service has been extremely positive," an Orange spokesperson told us, "with their usage and average spend higher than expected." Orange is also running a trial of mobile ticketing with Stagecoach earlier this year and expect this to expand in 2013.

"As well as payments, customers have told us they expect their loyalty cards and vouchers to be included in Quick Tap so we are working with retailers to make that happen, following up on our Treats from EAT offer." In the latter, anyone with an NFC-compatible phone on the Orange network could tap their mobile phone on specially designed posters at any of EAT's 110 outlets to receive a free treat each day.

Meanwhile, Blackberry smartphones with NFC have been trialled as digital keys, using identification data to open secure access systems in office blocks and networks.

Smart cards like Oyster could will be considered clutter once NFC gets started

Are there any alternatives to NFC?

Yes – and there are plenty within it, too. One debate in the mobile and finance industry is between the 'mobile wallet' as represented by NFC, or the 'digital wallet'. Calling NFC 'a technology, not a strategy,' PayPal's Kerry Wong, MD for Hong Kong, Korea and Taiwan, promotes the latter.

"The 'digital wallet' exists in the cloud, and it is not tethered to one specific device such as a mobile phone, but accessible from a variety of devices such as laptop, iPad, ultrabook or even Xbox," she says. Wong thinks that it's the ability to work easily, safely and on any device or platform that will win the day.

NFC is only one technology, with Bluetooth and RFID just as able to strike-up a conversation between two gadgets, but there are distinctions within NFC, too. In comes in both passive and active flavours, including P2P mode (exchanging information, such as business cards or contacts) and SecureElement NFC (where a machine recognises a NFC phone as a bankcard).

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How is NFC different to the new contactless bank cards?

It does away with plastic, but otherwise it's very similar to the chip-and-PIN killer. Most new Barclaycard, American Express, MasterCard PayPass and Visa Europe cards have NFC contactless tech within, and with 30 million already in circulation in the UK (look for the WiFi-like logo on the back) this is where the 'digital wallet' exists for now; in, err, your wallet.

Such cards can be used to make small purchases (typically under £15) in shops – and, since last week, on London buses.

"The foundations of the NFC ecosystem are now largely in place," says Gerry Kelliher, Europe Sales Operations Leader at Research in Motion. "Large scale initiatives like Visa's PayWave and Mastercard's PayPass mean that NFC terminals are appearing in thousands of UK high street shops."

If NFC identifies me, can I use my smartphone instead of a passport?

Not yet, but it should streamline travel. "While passports look as though they're here to stay, at least for international departures, we expect travellers will be able to pass through an airport without physical boarding passes very soon," says Kelliher.

Toulouse-Balgnac Airport has already successfully trialled NFC secure boarding passes with BlackBerry devices, which acted as their security pass for a dedicated, priority path through the airport. "Boarding passes based on QR codes have been around for some time, but NFC passes should be far more popular with airport operators.

Unlike QR codes, NFC codes loaded on to SIM cards can be used when the device is switched off," says Kelliher. "NFC passes are also far more secure than QR codes which can be easily duplicated, forwarded or altered.

Airports are certainly getting more tech savvy; Hong Kong International Airport now uses barcode imagers from UK-based data input company Access IS to read electronic boarding passes (sent by the airline as a unique barcode) on mobile phones.

NFC phones: which handsets have NFC?

A surprisingly huge number, largely because NFC has long been supported by the makers of Android handsets. Though Apple is yet to embrace NFC, flagship and mid-range handsets from the likes of samsung, HTC, Motorola, Nokia, LG and Blackberry all include NFC.

The latter all feature BlackBerry Tag, a peer-to-peer feature in the BlackBerry 7.1 OS that allows users to share contact information, documents, URLs, photos and other multimedia content by tapping their BlackBerry smartphones together.

Microsoft's Windows Phone 8 OS supports NFC, too, so expect upcoming smartphones from Samsung, Nokia and HTC to be compatible.

The full list, includes almost all Android tablets, too.

NFC is still in its trial phase, but it's got a big future. ABI Research predicts that 1.95 billion NFC-enabled devices will ship in 2017, largely in smartphones, though NFC will also enter the living room. WiFi routers will swap passwords for a simple 'tap' from any smartphone, tablet or games console, with 395 million consumer electronics devices to ship in 2017 – in other words, NFC will be in everything.

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