Cell Phones and a Cashless Society

Envisioning a World With NFC-enabled Phones

May 31, 2010

RFID Journal - The basic goal of many new technologies is to make life easier, and Near Field Communication (NFC) is no different. NFC is essentially a proximity radio frequency identification technology. It enables a class of applications, such as mass-transit commuter tickets or financial transactions via contactless cards, in which consumers can interact with a product or service when they are in its proximity.

Currently, NFC technology is undergoing various trials around the world. So, just where are people looking to implement the technology? One device is the mobile phone.

Business Benefits

By virtue of it being a connected device, a mobile phone embedded with NFC technology can enable businesses to connect with consumers, opening up new applications not previously possible. Applying NFC to public transportation ticketing, for example, can allow a commuter to purchase tickets online and have them provisioned on an NFC phone over-the-air (OTA), thereby enabling the handset to function as an RFID-enabled train or bus ticket. With knowledge of which train or route is being taken, the transit operator can then send related information to that individual.

Meanwhile, coupons, promotions and advertisements for various products and services could be transmitted to the commuter's phone, taking mobile marketing to a new level.

Similarly, in a payment application, a bank or other financial institution could provide customers access to other banking services.

NFC enables businesses to not only connect with customers, but also gather valuable market research data regarding those customers—their location, interests and demographics. For instance, imagine if a consumer used a cell phone to scan an NFC RFID tag on a pair of jeans in a shopping mall, in order to authenticate the product, search for lowest pricing on that item in his or her area, or obtain more information about it. After reading the tag, the phone would download the requested product information from the manufacturer's Web site, providing the company with data regarding the type of jeans in which customers are interested, and then correlate that information with sales data to understand customer preferences by demographics, location and so forth. This is very powerful real-time information, enabled by NFC technology.

Consumer Convenience

The benefits of NFC-enabled mobile phones are not just limited to businesses; consumers stand to benefit as well. In the transit application, for example, beyond the convenience of having a ticket purchased online provisioned on the phone OTA, commuters can dynamically buy upgraded or additional rides via the mobile devices. Moreover, the commuters can also get train route information and status updates to better plan their day, or search for similar products near their current location in order to compare prices.

When buying a high-value item, consumers can also utilize an NFC phone to authenticate that product prior to making the purchase, assuming there is an NFC RFID tag attached to it.

What to Consider Before Implementing NFC Technology

While there are many possible applications and benefits for NFC technology—some that may not have even been envisioned yet—there are still factors to take into consideration before moving forward. First and foremost, Near Field Communication is a consumer-facing RFID technology, requiring a new approach on multiple fronts. On the business side, consumer product manufacturers must change their focus from non-customer-facing operations to customer-facing communications.

This means altering the focus from reducing costs in the supply chain to finding new ways of marketing and connecting with customers, with the end goal of driving up revenue and brand recognition. Why the change? Because the budget for NFC-enabled applications and campaigns will not come from supply chain organizations, but rather from marketing and advertising organizations. From the standpoint of RFID companies developing NFC technology, they will need to develop a new set of value propositions to appeal to a different side of the enterprise customers.

On the technology side, there is a different set of considerations. Security will take center stage across almost all applications—financial transactions, ticketing and access control, and even consumer product applications. NFC technology must ensure that only the correct customer gets access to the right product, service or promotional offering.

By definition, NFC tags have a very short read range—typically, just a few centimeters. Consequently, businesses will also have to determine how to apply both NFC high-frequency (HF) RFID tags and long-range ultrahigh-frequency (UHF) tags for supply chain applications, as well as define priorities and/or processes for supply chains.

Taking a look at costs, the expense of RFID tags has previously been an impediment to widespread use. However, the prices of RFID ICs and tags have been dropping, and printed RFID chips will take costs down to unprecedented levels in the future.

Alternative security technologies, like Physical Unclonable Functions (PUF), further lower the costs of security and authentication. PUF is a type of silicon "biometrics" technology that provides low-cost mechanisms for robust authentication of ICs, such as those used in NFC RFID tags. Verayo, one of the recent entrants in the RFID IC space, has introduced its Vera M4H, a low-cost secure and unclonable RFID chip based on PUF technology. Lower cost reduces the barrier for broader application of NFC RFID tags, to a broader set of lower-cost consumer products. While price becomes less of a concern, the upside will be new revenue generated with new applications.

NFC-enabled mobile phones have obvious advantages for both businesses and consumers, while the technologies are now mature. The issue blocking adoption, however, is the "chicken-and-egg" problem—that businesses are waiting for the phones to become available, while operators are waiting for the applications. But, along with worldwide trials of NFC, there are some out-of-the-box approaches that may very well be the catalysts in driving adoption. Perhaps the next time you walk into a wireless provider store, you just might see an NFC mobile phone.