Near field communication is the wireless technology that’s about to find its way into your mobile phone. What is it and why should you care?
Over 10 million Oyster travel cards have been issued in London since their introduction in 2003, with five million touched against readers on the Underground every day. But do you know what they do or how they work? Should you even care? Well, yes you should: the ingenious little chips in these cards are going to shape how consumers interact with brands, and ultimately dictate consumer behaviour.
Oyster-style systems are well established at major transport hubs around the world. They operate by sending data to a mainframe, which acknowledges the transaction and updates your travel card. But the same system could just as easily transmit data to your bank, credit card supplier, mobile phone operator or the personal account of someone you know.
The technology is called Near Field Communication (NFC), and as it’s reshaping the future of how payments are made, you’re going to be hearing a lot about it over the next few years. So what exactly is NFC, and what’s it actually good for beyond five extra minutes in bed before you fast-track your way through the morning commute? Unfortunately, there’s no way of explaining without resorting to techno-jargon. NFC is a short-range wireless technology that interacts with electromagnetic radio fields. It’s meant solely for applications where a physical touch (or something close) is required in order to maintain security, which differentiates it from Bluetooth’s direct radio transmissions.
The big news is that the technology will soon be ubiquitous in mobile phones (simply taping your Oyster card to the back of your device is a primitive form of this). In basic terms, there’ll be a chip in your phone that will be able to talk to payment terminals specially designed for NFC, eventually replacing credit and debit cards. In Japan, NFC is already being used to pay for a range of items, from transport to alcohol, clothes and refreshments from vending machines.
“Not only will you be able to make payments from your phone, the same device will also contain your ID, railcard and all those frustratingly addictive membership and loyalty cards that you can never find when you actually need them.”
Google launched the first NFC-enabled device, the Nexus S, in December, and other manufacturers will follow suit. So not only will you be able to make payments from your phone – throwing your wallet out the window and creating extra space in your pockets for your hands – the same device will also contain your ID, railcard and all those frustratingly addictive membership and loyalty cards that you can never find when you actually need them.
How will this happen? The NFC chips are tiny, so anything and anyone – from burly bouncers to train conductors – can become NFC-enabled. And the really great news is that it isn’t going to be expensive to invest in the technology.
The bandwagon is already rolling and it’s not going to stop. Thousands of retailers have already installed NFC readers, including Pret A Manger, Starbucks and EAT – all of whom are enthusiastically promoting them as a means of payment that rewards brand loyalty and minimises queuing time.
Over the next few years we’ll see a range of devices offering NFC capabilities, but one point worth emphasising is the functionality of location-based services, such as being able to offer consumers personalised discounts on items. For example: you regularly frequent a large coffee chain, let’s say Starbucks, but you haven’t stopped in for three weeks. The Starbucks boffins can create a program that recognises this change in behaviour and, with your permission, sends you a message checking you’re okay and asking if you’d like a free drink. Just imagine – maybe you’ve done something as simple as move office and there’s no longer a Starbucks on your way to work. The NFC app can recognise a store close to your new journey and offer a tailored discount. Perhaps as you walk in, you receive a message offering you a free snack with your coffee, which you can redeem immediately through the wonders of NFC. The brand has gone out of its way to check that you’re okay and thrown a free caffeine hit into the bargain. Brilliant: you’re now as loyal as an old dog. The knock-on effect from word-of-mouth will be huge. Customers want brands to care about them, and NFC technology can help businesses do just that.
This is only one example of how smart and adaptable the technology is – and it’s only going to get smarter and more interactive as it matures. Soon, NFC will affect all your daily habits, whether at the petrol station, supermarket or on a night out.
We’re on the cusp of a new era in consumer relationships. The time to act on NFC is now; otherwise you’ll be touching into the train after it’s already left the station.
For up-to-the-minute information, visit NFCtimes.com.