NB: This is a guest article by Stephen Vanderpool, a writer and blogger at NerdWallet.
As of late, Google Wallet and Near Field Communications have taken a lot of flak from cynics, naysayers and glass-half-empty types.
Don’t be dismayed by the Debbie Downer skeptics – NFC will soon be integrated into nearly facet of personal finance and revolutionize the landscape of travel consumerism as we know it. It won’t happen over night, but it’s not too far off, either.
Getting started
NFC has quickly become a widely covered topic on tech blogs, finance sites and news sources across the web, so we won’t spend too much time on the basics.
For those of you who need a refresher, NFC – or Near Field Communication – is a technology that enables wireless monetary transactions and data transfers between two devices. Though its potential capabilities border infinity, right now everyone is obsessed with NFC as a form of contact-less payment.
The release of Google Wallet heralds a new age of consumer spending. Currently, the primary goal of NFC seems to be ridding the world of plastic credit cards, stacks of loyalty cards and paper coupons. Google Wallet allows users to put credit card information on their mobile devices.
A simple wave of the phone pays for your purchase. Google Wallet’s SingleTap feature allows for the seamless transfer of coupons, loyalty cards and payment information in one simple tap.
Phones and fares
What does NFC mean for travel? A lot. The New Jersey transit system just partnered with Google Wallet to allow commuters to pay fares with phones. So far, sensors have been installed in Penn Station ticket machines, the Newark Liberty International Airport rail station and select buses.
Google hopes to use public transportation as a launching point for NFC payment. As commuters grow accustomed to paying for transport with their phones, they will (theoretically) become more comfortable with making other general purchases using NFC-enabled mobile devices.
The application for NFC in airports might not be as self-evident. Because passengers purchase tickets long before their actual departure, NFC doesn’t make much sense as a ticket-buying tool.
However, NFC will provide new methods for passenger and baggage check-ins, security checks, lounge access, boarding procedure, on-flight purchases and post-flight transportation. It will also be interesting to see how NFC will function in conjunction with airline credit cards and frequent flyer rewards programs.
The following hypotheses are largely drawn from a document released by the GSM Association and IATA.
NFC in airports
For starters, NFC will bring about the extinction of the boarding pass. Using self-service check-in channels, passengers will receive boarding tokens over the air, which will store boarding pass data on their mobile devices.
Rather than keeping track of a physical boarding pass, passengers will bring their phones to touch points along the way.
NFC should reduce baggage check-in time as well. Passengers will be able to identify themselves quickly using their NFC devices, making for quick tag printing and drop off. Additional baggage fees will be electronically charged and made payable by NFC mobiles.
NFC will help streamline the process of determining eligibility for security Fast Tracks. Passengers can swipe their devices at security checkpoints and be automatically directed to the proper line. Similarly, NFC will help regulate access to airport lounges.
Both lounge and Fast Track access may be purchasable through NFC transactions. And when it comes time to board, passengers need only present their phone near the boarding gate reader rather than fumbling around with bar codes and variable technology.
During the actual flight, passengers will be able to make purchases using nothing but their phones. Upon landing, NFC will simplify the process of arranging transportation away from the airport.
NFC will allow passengers to add ground transportation options when booking flights. The tickets will be sent to their devices and make the transition from air to ground seamless.
How close are we?
Google Wallet has received mixed reviews since its release. Most of the negative reviews revolve around the technology’s present limitations. Phone options are slim, and the only functional payment options are Citi MasterCards and the Google prepaid debit card.
On top of that, many merchants do not yet possess the means of accepting payment through NFC. Everyone seems to agree: Getting that infrastructure in place – equipping merchants with the proper technology – is the biggest gap to bridge.
David Holmes, vice president of NFC Solutions at Identive Group, says:
“Nothing will drive contactless infrastructure like mobile phones.”
An authority on NFC technology, he believes NFC will near universal acceptance within the decade. By the end of 2011, 12 new NFC-enabled phones should hit the market.
Despite complaints about Google Wallet’s severe limitations, NFC is building momentum. Technology spreads fast, but we can’t expect instant universality. Have a little patience. The definition of “phone” is expanding every day, and pretty soon it will come to include contact-less payment device.
NB: This is a guest article by Stephen Vanderpool, a writer and blogger at NerdWallet.
About Special Nodes
Much of the talk about NFC has been contactless payments buyt the value that Near Field Communication can deliver goes far deeper than that. The ability to deliver on demand information from Smart Posters will turn NFC into a viable marketing tool as more and more people turn to mobile devices as the preferred choice of communication
I agree with Smart Poster. Both marketing and payment capabilities will have incredible impact on how business products and services are sold in the future. And I’m not worried about Google in this transaction . Now that I found out they have a prepaid debit card, I’m getting it today! Want to understand this technology in action.
Agreed that NFC has so many uses beyond payments…I would hate to see the NFC chip held hostage from being on the phone just because the payments thing is too hard to figure out.
Interesting – maybe we are approaching the inflection point of the hockey stick curve – but then maybe we are further from it than we imagine. That is very often the case – most technologies/process changes have been creeping up on us for longer than we imagine or recall.
I remember similarly eloquent arguments (from “authorities on the technology”) in favour of chip-bearing credit cards being able to do all those same things over a decade ago – and they still don’t. If one takes, say, the late 90′s as the birth point of this “meme”, maybe NFC in widespread use is not so far away – perhaps only another decade or so.
Apart from the staggering infrastructure change that is needed (airlines moving to bar-coded boarding passes is trivial by comparison) there is a huge behavioural change required and a very considerable period of duplicate infrastructure support that may not prove attractive in an era of economic uncertainty?
SITA Labs just completed the creation of a full end-to-end working demonstration room for NFC with our partner Orange, and we can definitely see the potential for NFC in the airport. The big issue will be getting some agreed standards between the major players like Google, Credit Card companies, and Telcos…more here http://www.sita.aero/content/nfc-still-not-so-near
I haven’t landed one-way-or-another on NFC for payments yet. I do agree that NFC will be in lots of devices and used for lots of useful things. On the NFC-for-payments topic, how about some of the following to think about:
1) The need for contactless in transportation – I totally agree, but don’t existing RFID techniques serve this just fine? Also, isn’t a universal bucket of prepaid-points/ID/entry-key/etc. elements in a RFID thingy WAY LESS contentious then a universal bucket of bank accounts in a NFC thingy?
2) Consider the secure execution environment of an ATM or POS and compare it to the open execution environment of a mobile device or PC…is it really the smartest thing to be driving towards putting secure bank account information into a non secure execution environment…really?
3) Agreed that cards gotta go…but attempting to store them in a device that has a non secure execution environment seems like the most unlikely answer. Are we saying that the only answer to get rid of cards is NFC? Surely NFC cannot be the edge of the thought universe on getting rid of cards.
4) Seems like the industry is pushing: “If NFC can’t work for payments then NFC is dead”…consider the opposite: “NFC is a great technology that will be used for all kinds of things, it’s not dependant on payments to become a reality”. Also, consider this question: “If someone told you that a GPS chip would not be allowed on phones unless it could facilitate payments…would you believe them?”
Here’s the link to the IATA paper:
http://www.iata.org/whatwedo/stb/fast-travel/Documents/iata-public-whitepaper-issue1.pdf
For non-payment applications we see NFC adding several layers of security when compared to print or mobile barcodes. And when NFC is built into the phone, the cost difference between printed barcodes (low) vs. NFC tags (high) will no longer be a consideration – though there will still be a huge market for NFC tags.
For most real-world applications, however, the device reading, tracking & validating NFC data will also have to be able to read both NFC and barcodes seamlessly as both will be presented by consumers at the point of service for a long time to come.
We think smartphones themselves are ideal for this task when provisioned with enterprise-grade apps and integrated Web Services.