Near Field Communication (NFC)

Near Field Communication (NFC) was developed by Phillips  and Sony  as a convenient and short-range communications technology. It is mostly used for processing transactions and for transferring small amounts of data. It is designed for primary use with smart credit cards that enable purchases without having to swipe the card and sign, and for data transfer and communication via mobile phones.

NFC shortens the process of swiping credit cards and providing a signature by embedding special chips in the cards, which then simply need to be waved in front of installed scanners. The correct amount is then automatically applied to the card. NFC is used in Singapore  and in many places in Japan and Thailand for traveling, where the card is used in place of tickets.

The most widespread and high-potential use of NFC is in mobile phones. Phones can communicate with each other, to transfer pictures, songs, and messages. Users can store business cards on phones, which can be swapped. Special NFC-enabled bus stations in Germany  allow consumers to download timetables onto their phones, and similarly, movie trailers can also be downloaded.

There have been efforts to use special chips on mobile phones as a sort of "e-wallet." These chips would securely store credit card information, coupons and membership data for clubs, with the idea that consumers would no longer need to carry multiple cards, or even a wallet, because the phone could be used to purchase items and access secure areas.

NFC uses encryption to ensure secure communications. Another benefit is that NFC is psychologically comfortable for consumers because the devices communicate at a handshaking distance of each other. This makes NFC more secure than radio-frequency identification (RFID) because "eavesdropping" is almost impossible. A malicious intruder who is trying to scan or steal data, or decrypt the communications would have to be standing extremely close to the target in order to even receive the transmission.

The biggest concern with NFC is the physical security of NFC devices. Since mobile phones are usually small, they are easy to lose or steal, and the fear of all one's personal and security information being stolen has been a major factor in NFC's not being widely adopted. Other concerns are related to privacy, since service providers may be able to track consumer behavior and use this for content-based advertising on mobile phones.