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How NFC is supercharging smartphones

By Nick Broughall | 3:07 pm 11/01/2013

The loudest cries of disappointment from Apple’s recent iPhone 5 launch had nothing to do with its new ‘Lightning’ connector port or the lack of a 128GB version. Instead, the armies of the unimpressed were bemoaning the lack of NFC, or Near Field Communications, technology inside the latest iDevice.

For the always-hungry Apple rumour mill, the inclusion of NFC in the latest iPhone was to be the turning point for mainstream adoption of the wireless technology. But even though Apple hasn’t boarded the NFC train yet, the technology is ramping up and becoming more and more prevalent in today’s market.

Put simply, NFC is a wireless technology that allows the transmission of data between two devices in close proximity to each other. It is based upon the RFID standard, which means that it is possible for an NFC-enabled gadget to interact with an unpowered chip, known as a tag.

The fact that NFC can work with tags that don’t require power opens up a huge range of possible applications for the technology. For a start, it has meant that MasterCard and Visa cards have been able to kickstart the contactless payment revolution with their PayWave and PayPass systems by including an NFC tag in a credit card.

The PayPass system connects with NFC tags in MasterCards to enable automatic payments.

But what has ignited the potential of NFC is the rise of smartphones. Despite the fact that the bulk of current smartphones don’t include NFC (including the new iPhone), that hasn’t stopped app developers, banks, and dedicated companies from creating products and services that can (or will) take advantage of the many benefits NFC has to offer.

Show me the money

The most exciting use of NFC is the prospect of the digital wallet. Even without critical mass in NFC-enabled smartphones, banks and credit card companies have been doing everything they can to bring mobile NFC payments to market.

With an NFC-enabled device, customers will be able to use their phones to pay for a variety of products, from hardware at Bunnings to groceries at 7 Eleven and everything in between. Using the Mastercard PayPass or Visa PayWave infrastructure already in place in stores around the country, these handsets will replace the need for credit cards by connecting to your bank or credit card accounts through dedicated apps.

The Commonwealth Bank has led this push in Australia through its Kaching app. Alongside its real-time banking application, the bank launched a special NFC-enabled iPhone case called iCarte that converts an iPhone 4 or 4S into an NFC-compatible device.

Unfortunately, despite also being available on the Android platform, the Kaching app doesn’t support NFC payments through Google’s smartphone operating system. The bank has claimed that the reason for this is that while many Android handsets have integrated NFC chips, none have enabled the secure element of the chip to allow for safe mobile payments.

The good news is that this can be rectified through a software update, which means it should not be a difficult process to enable.

While CommBank has focused its early NFC efforts exclusively on the iPhone, Westpac has gone for a more universal attempt by removing the need for an embedded NFC chip in the phone or case, and instead placing an NFC tag on a SIM card.

Currently being trialed around the country, the special NFC-enabled SIM card works in conjunction with a special app for Android phones that turns the handset into a virtual PayPass MasterCard. The beauty of this solution is that almost any Android handset can become a digital credit card, without the need to upgrade to an NFC-enabled version.

With the iPhone 5 lacking NFC, as well as having an elongated body that won’t fit the Commonwealth Bank’s iCarte NFC case, it seems that options for contactless mobile payments on the new iOS device are severely limited, at least in the short term.

But with more and more NFC-enabled Android smartphones hitting the market, it’s only a matter of time before mobile payments become mainstream. Currently there are over 100,000 contactless point-of-sale devices around the country, with both Coles and Woolworths publicly announcing plans to bring contactless payments to their supermarket chains.

In other words, the infrastructure is there for the mobile wallet to take off, banks and smartphone manufacturers just need to connect the dots.

Touch me, baby

There’s no doubt that the idea of using your smartphone to buy stuff is the most appealing aspect of NFC devices. But the beauty of NFC is that it has the potential to be so much more.

Already we’ve seen Sony Ericsson include a pair of NFC tags in the box with NFC-enabled Xperia smartphones. These tags can be easily programmed to adjust smartphone settings quickly and easily by tapping the phone up against the tag. For example, you can automatically launch the phone’s satnav application, turn off WiFi and switch on Bluetooth by touching a tag located in your car, saving you from manually adjusting these settings yourself.

Sony packaged some Xperia smartphones models with NFC tags that could be programmed to automatically turn on features like WiFi and navigation.

The same tag-based opportunities will soon make their way into marketing, replacing the cumbersome QR code as a way to engage consumers with brands, special offers and discounts. Australian startup TapIt, for example, is developing world-class marketing strategies using NFC, which can be programmed to initiate anything from a link, to Liking a business on Facebook, to offering tourist information at key locations around The Rocks in Sydney.

Both Nokia and Parrot have used NFC to bypass the pairing issues with Bluetooth, allowing wireless headphones to connect to smartphones by simply touching them together. At the January 2013 Consumer Electronics Show, manufacturers such as Sony showed NFC enabled televisions, Blu-ray home theatre systems, speaker docks and tablets which allowed easy pairing for smartphone control and streaming media solutions.

Announced at CES, Sony's new portable speaker range can stream music from NFC-enabled smartphones and tablets.

Of course, these are just some of the practical uses of the technology presently being explored. There is potential for the technology to reach even further into daily lives, turning a smartphone into a house key or car key.

A recent concept from Hyundai, for example, showed how a smartphone would allow you to lock and unlock the car by waving your phone over a small tag on the car window. Inside the car, the smartphone would wirelessly charg on a pad in the centre console, while content syncs and streamed to the incar infotainment system and touchscreen. The company is aiming to introduce this level of smartphone integration by 2015.

Another possibility is to transform your smartphone into a ticket. Whether it’s to get in to see the latest blockbuster movie, board a plane or just hop on a bus, NFC will enable consumers to tap their smartphone on an NFC reader to enter, streamlining the process of boarding or entering a venue.

With Locktron's NFC lock installed on your door, an NFC enabled smartphone can can be your keys, allowing you to lock and unlock your door remotely.

Combined with the idea of a digital wallet, NFC has the ability to truly make your smartphone the only device you ever need, replacing cash, cards, keys and tickets. It’s no wonder then that it’s expected that 843 million NFC smartphones will be sold in 2015.

 But is it secure?

NFC’s biggest drawback is its questionable level of security. Hackers have shown that it is possible to intercept data transmitted between two NFC devices easily, allowing criminals to gain access to your credit card details without any effort.

But to do that, the hackers needed to be within a few metres of the NFC devices. This in itself is a pretty good security function, as it will always be easy to tell if someone is trying to intercept your details.

In any case, security for the standard is only going to get better over time as the technology becomes more and more mainstream.

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