Mobile Payments, NFC and the future of money

NFC or near-field communications is a relatively new, wireless technology that is being slowly implemented into the mobile sphere much like Bluetooth and GPS before it. Much like Bluetooth, it operates over relatively short ranges to transmit  relatively small bursts of data. However, unlike Bluetooth it can interact with passive, unpowered objects in much the same way as RF ID tags do. The extensive use of NFC in mobile, much like “mobile money” was pioneered predominantly in the far East in countries like Japan where they form a nigh-intrinsic part of some individual’s lives with groceries et al all being paid for via phone.

In the western world while this idea is promising, it has yet to fully take off. In part due to the lack of buy in by mobile carriers (who wield way too much power in my opinion) and financial institutions, who have been reluctant to take what is perceived as a massive risk.

One needs only to look at the debacle surrounding the first set of credit cards and the cluster-**** that it created to understand why it’s taken so long for what is in actually rather simple hardware to be implemented in ways that make our lives better. Software, security and redundancy are key especially the propensity and likelihood of fraud and theft in the relatively unsecured mobile world.

Nokia itself has made numerous forays into the world of NFC, having released at least two devices in the past, the 6131 NFC and the 6212 before releasing the more recent C7. Other manufacturers on other software platforms including Google are making serious inroads and we can only hope that a strangehold isn’t created on the market before other players can come to the fore.

Recent reports by the NY times indicate that Apple is also moving strongly in this direction but also Microsoft with its Windows Phone 7 platform and a certain, unnamed  “partner handset manufacturer”. A manufacturer that anyone with eyes can envision to be Nokia. The question is, how significant could such a partnership and venture be and how significant would such a development be in our daily lives.

First, take a second to think about how much cash you walk around with on a daily basis. Next consider the last time you wanted to purchase an item and you were unable to use a credit or debit card to make that purchase. Lastly consider whether you feel that technological advancements have been made in recent years to adequately replace the flimsy plastic and magnetic strip.  Much like dedicated MP3 players, standalone GPS devices and PDA’s mobile phones are rapidly taking over functions normally delegated to stand-alone devices. This integration is the future.

Imagine a future where your identification, be it your driver’s license, passport, biometric and/or insurance data was accessible through NFC enabled devices or even your phone itself. Consider how restaurants would be able to serve up menus via passer-by simply tapping a device to a sign. Imagine being able to purchase items anywhere, anytime using that same device and/or using your handheld as a ticket for a movie, show or boarding pass for your choice of transportation.

The benefits, simplicity and efficiency of the use of such a device need not be pointed out to you, the only remaining question is who. Who is going to be controlling that future? What rules, regulations and/or restrictions will be placed on the use of this technology? Will we have a situation where Visa’s are only available on Nokia’s or MasterCard on Android? Will we be charged severely or exploited by the owners of this technology? And what benefits do the pioneers of this technology stand to gain?

If company’s like Visa and MasterCard are any example of the benefits that controlling  and pioneering a technology can bring to the table,(net incomes of 2.9 and 1.8 Billion USD FY2010) Nokia better pray they get a large hand in the pot.

Tags: Editorial, Money, NFC

Category: Nokia