Near Field Communication (NFC), which can transform your phone into a credit card or metro ticket, has so far only been talked about.
But that is set to change with Master Card certifying a Near Field Communication (NFC) application on Gemalto-branded SIM cards. Now it’s up to mobile manufacturers and carriers to preload the smart card with credit card information.
Visa, another credit card biggie, will install over 60,000 points of sale across London before the Olympics are held there next year. It has also tied up with Samsung to roll out a mobile payment program in the city.
The companies will make special phones for the Olympics, which have to be held before an electronic reader to make payments.
The program could help build momentum behind NFC, which uses short-range wireless technology to transmit data.
Google, with its mobile operating system Android, is also preparing to give a big push to NFC. It has tied up with City Bank and Master Card to include the technlogy in all Android phones.
Currently, almost 18 million Android OS phones are sold every quarter. If new Android phones start shipping with NFC capability it will be a huge boost to NFC’s prospects.
NFC has been successfully implemented only in Japan. The main reason behind the sluggish pace of its implementation in other countries is the lack of infrastructure that enables NFC payments.
If the entire eco system (including banks, credit card vendors, handset makers and software developers) come together, there is no reason why NFC won’t be the next big thing.
Banks play a very important role in this as they have to feed credit/debit card info into the phones’ NFC gateway and they also supply PoS (point of sale) equipment to merchants. If they do start rolling out services based on NFC, half the battle will be won.
For any payment system, the biggest problem is arranging point of sale equipment (PoS) at the merchant establishment.
With efforts such as Visa’s, the momentum gained will be enough to push adoption elsewhere, and will open flood gates for an NFC enabled mobile phone launch. Thereafter the benefits of the system will drive the adoption of the technology.
In India, City Bank did an NFC trial in Bangalore a couple of years ago. At that time the bank said it is excited about results. Recently, Tata Docomo started an NFC trial in Hyderabad for bill payments, and application and service purchases. Depending on its success the service will be expanded across the country.
NFC enables people to make payments without a credit card (credit card info is placed on a very small chip sticking to the SIM card/back of the mobile phone case). The other possibilities include Metro cards, toll plaza cards, and many other access card applications.