Sunday, April 01, 2007

What is mobile about NFC?

NFC is an acronymn for "Near Field Communication". (See the NFC Forum). Many projects are currently being conducted to prove the viability of utilising phones with RFID chips in payment procedures. The intention is that one would be able to "swipe" your phone instead of "swiping" a credit or debit crd at a point of sale terminal. The picture on the right is an experimental deployment currently being conducted by Gemalto.

In order to minimise the impact of existing payment systems, all of the deployments are basically an extension of existing card based payment schemes. The phone swipe at a terminal initiate almost exactly the same transaction to the issueing bank as if a card have been swiped. The effect of this payment could also be achieved by imbedding the NFC chip in your sunglasses or for that matter in your credit card. The system does not recognise that the chip is actually in a phone, it just respond to the NFC chip. This is great technology for a number of reasons. The speed of concluding a transaction and the reliability of the infrastructure are big advantages over existing card based transactions. But why are NFC payments sometimes refered to as mobile payments? Nothing is mobile about it.

The terminals that read the NFC chip is static, the payment is routed in exactly the same way than any (or all) existing card transactions are. So is it because a NFC chip can be embedded in a phone that we call it mobile payments? That would mean that if an NFC chip was embedded in watch, we would call it Timeous payments? A reason could be that we can carry the payment instrument (the NFC chip) around. The payment instrument is therefor mobile going with us from one terminal to another.... just as we currently do with our credit cards. So that would mean that we have been using mobile payment instruments all the time (by carrying our credit cards from one terminal to another with us).

True mobile payment instruments should enable the payer to perform a payment at any place. (For instance the payer should be able to pay for parking without having to be close to his/her parked car). NFC payments today (and for as long as one can imagine) will only be happening at points where NFC enabled terminals are installed. This is definitely NOT mobile payments.


Hannes@Home said...

Garanti Bank from Turkey announced during May that they will issue a limited number of NFC chips running Mastercard's PatPass payment technology. A different kind of mobile payment than mobile payment on mobile phones, but actually exactly the same. As was predicted in this blog.

Anonymous said...

Great Information!
Mobile Payments

Hannes@Home said...

Just read my comment again. It was not clear, but Garanti embedded the NFC chip in a watch.