Coming eMarketing trend: NFC (near field communications)

Although already mentioned in a previous class, this trend is in my opinion important enough in the near future that I chose to blog about it.

Near field communication (NFC) chips, based on RFID technology, allow instantaneous communication between mobile devices. The difference from RFID is that transactions can be conducted through NFC, and that NFC can be linked with mobile applications. An NFC chip can contain e-money, proofs of membership (for gyms etc.), keys (for hotel rooms etc.), loyalty program points, credit cards, business cards and other data. NFC is also likely to succeed QR codes, since NFC requires only swiping the phone on an NFC tag, no scanning with a camera is needed.

As for security, in principle, NFC is safer than cash since an NFC device can be protected (through a password or biometrically) and locked remotely in case of loss or theft. Unauthorized reading of an NFC transmission can be hindered through SSL technology.

Although the first NFC-enabled phone was introduced as early as 2006, and services such as Mobile Suica in Japan and Hana SK credit card in South Korea have already gained popularity, this technology is yet to go global and yet to show its full potential. I can see 3 reasons to this:

1. NFC chips do not yet have a global standard. In the case of Japan, the most popular NFC service (Mobile Suica) is only available in Japan, and uses Sony's proprietary FELICA chip. The chip is expensive and has not seen diffusion outside Japan. However, there is already an ISO standard for NFC, and many handset manufacturers including Samsung are installing globally standardized NFC chips. With the diffusion of smartphones manufactured by global companies, it is likely that global standard NFC chips will become standard also in Japan.
2. NFC chip in itself is not sufficient for transactions - application software is needed. Until now, mobile carriers have had their own proprietary, regional software which is not globally compatible. One notable candidate for global NFC application software is Google Wallet.
3. Security concerns. It will probably take some time to convince people to use electronic payments in a new way: offline transactions. Technology standards have to include robust security. In the ideal case, NFC will reduce crime as e-money becomes much more difficult to steal than cash and credit card information.

As this technology is already available today in Japan and limited number of other markets (talk about unequal distribution of the future...), and has many useful and convenient applications, I suspect NFC will be the next BIG thing in eMarketing.

References:

http://en.wikipedia.org/wiki/Near_Field_Communication

http://www.advertimes.com/20111202/article42875/

http://www.nfctimes.com/blog/dan-balaban/google-gears-nfc-m-commerce-wallet-war-ahead