The Beginning of the End for Near-Field Communication?

When near-field communication first became available in smartphones, I happened to be in the market for a new one. Enticed by effortless transactions, I bought the latest NFC-capable phone, and used it to buy things zero times. I've since replaced that original NFC phone with a second-generation NFC-capable phone (but this one is waterproof!). I've also never conducted a transaction with the NFC feature on this second phone, meaning my cumulative use amounts to nothing.

I'd say it is one of those instances where I was more enamored with the idea of NFC, than its actual use. NFC initiates communication between two NFC antennas via electrically- or magnetically-modulated fields, but not by an electromagnetic field. Small transceivers produce an omnidirectional field and exchange data when within distance, typically several centimeters or less. By equipping NFC tags in cell phones, immediate transfer of data is established simply by confirming what program to execute, and placing two NFC terminals within the appropriate distance of one another. The technology is closely related to RFID, but since the antennas are so small, no standing wave can develop, and connections are terminated once out of range.

This technology has been implemented in a variety of applications. It can instantaneously download files and programs. Tap a wifi hotspot and get instant internet access. NFC can share photos, videos, and music between devices just by touching them together. Most ubiquitously, NFC has replaced older methods of electronic payment with a simple "tap and tap" payment system. Instead of handing your credit or debit card to a cashier, waiting for the swipe and authorization, followed by a signature, customers can now load their data into a secure app. At the POS, the customer taps their phone to the register's NFC terminal, at which point their app opens and prompts for a user-designated security pin, or other credentialing method. Most importantly, this data exchange doesn't require an internet connection or cell signal-as long as the phone is on, it will work.

As has been the case since the dawn of credit cards, merchants are nickel-and-dimed by credit card companies for each transaction. Not only do credit companies collect a 1-4% commission on each charge, but also intercharge fees (consider it the ATM fee of the merchant world), and they may also collect from leases or purchases of credit processing equipment.

So big merchants (Walmart, Target, Best Buy, Lowes, Sears, 7-Eleven, Dunkin Donuts, amongst others) have aligned to create CurrentC, a similar contactless payment option that relies on optical barcode reading, rather than NFC-linked credit cards. When a shopper arrives at the POS, he or she scans a QR code with their camera, and funds are withdrawn from a bank account linked via an app.

Creating CurrentC cuts out the middle man, in this case the card companies. The argument is that doing so can correspondingly lower the costs of products, but it will undoubtedly leave a higher profit margin for retailers. Using a QR code also means older camera phones with a QR app can be used--the latest generation of smartphone is a prerequirement.. It's tough to guess if this contactless payment method will ultimately catch on (this article says it can't), but it's also totally irrelevant to my point. W pockets your money ultimately falls in is meaningless, because once it leaves your possession, who cares.

NFC availability has only been around for about four years and has varying degrees of proliferation, depending on where you live. It replaced RFID as it is considered more secure, and since the primary application of NFC is for transactions, usurping NFC transactions with CurrentC would severely limit its development. There aren't many other applications in serious development, since RFID is such a versatile system. Moving towards an optically-read barcode and away from NFC is actually a regression in technology, and one that may make data more available to pirates and hackers.

That reason is enough to support NFC. Last week, Apple revealed ApplePay, its introduction into NFC transactions via iPhones. Though the technology isn't new, they represent the best chance for this burgeoning technology. Perhaps they can be the first to offer a comprehensive noncontact payment solution, and if they can't, then it may well be the dying breaths of NFC