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Is NFC (Near field communication) the answer to mcommerce woes?

The FT on Friday seems to think so (Near field communication – the mobile phone that puts cash out of business by Ben King Dec 16 2005 – financial times – London ).

This blog draws on some insights from this article and adds some of my own thoughts to the uptake of NFC

Every time I use my ‘Oyster’ card – I think about how easy it would be to extend the same concept ‘beyond the London underground’. i.e. use the Oyster card to carry cash and pay for items.

The Oyster card (and other similar cards such as Octopus in Hongkong and suica in Japan use a technology under the umbrella called NFC (Near field communication) governed by the NFC forum

What possibilities does an amalgamation of NFC and the mobile phone hold? How will it boost mcommerce? Mcommerce has had a chequered history. Is NFC the answer to mcommerce woes?

So far, mcommerce does not seem to have taken off in most parts except oddly in places like Africa (and also of course Japan and Korea).

In Europe, the last attempt to create a ‘top down’ mcommerce body ended in disaster (Simpay).

But Simpay was only the latest disaster. There were many more previous attempts at mcommerce such as the mondex trials with BT , Dual chip phones as early as May 1999 in Helsinki.

Other scenarios were tried out – for example, collaboration between one Mobile operator and one bank (e.g. Postbank and Telfort in the Netherlands) or one Mobile operator and several banks (e.g. the Mobile operator TIM and Italian banks in Italy). Pure play vendors – such as Paybox who were solely in the business of providing a payment platform also were an option.

Ofcourse there are the more successful options such as premium SMS and SMS payment systems such as in Korea where you accept the transaction by SMS (but still use your credit card).

Still .. mcommerce is not mainstream though .. and that’s sad.

Will NFC change that?

Like many ideas, mcommerce has clear practical benefits to consumers and businesses but the incumbents(like banks and credit cards companies) are too deeply entrenched especially in western countries. The operators also cannot seem to agree on a standard.

At first glance, NFC seems to be yet another forum. If you remember the old days prior to OMA, there have been many previous attempts prior to simpay and many fora (many of which merged under the umbrella of the openmobile alliance .

Then, there was Bluetooth – full of promise but low on execution.

However, NFC may well gain from the Bluetooth experience. Its not enough to create a technology like Bluetooth and have some start-ups create applications. In most cases, these applications remain in the prototype stage. Its far more important to have a major non operator consumer body behind the execution (such as the London underground).

In the past, many thought that the operator was the logical choice. Clearly, that’s not happening except for some isolated cases. Even payment services like vodafone m-pay are useful for the operator’s customers only. It’s debatable how many people are using operator led payment systems such as m-pay

So, what is NFC?

Devices containing NFC technology are triggered by proximity(few centimetres). Think swiping your oyster card. Its possible to equip a phone with NFC technology for as little as three pounds. NFC operates in the 13.56 Mhz range.

As per the NFC forum web site

The vision of the NFC Forum is to enable users to access content and services in an intuitive way by simply touching smart objects and connecting devices just by holding them next to each other. To bring this vision to life, the NFC Forum invites all interested parties — companies from mobile communications, consumer electronics, chip manufacturing, computing, media and entertainment, telecom and payment services sectors — to join the NFC Forum and help further our goals.

Collectively, the NFC Forum’s members will develop and agree upon common protocols for basic links between devices, standards for interoperability based on common data structures and formats, specifications for device-independent service delivery, and more. The Forum will then work to promote these deliverables and the use of NFC technology worldwide. All of these efforts will support Forum member companies in providing successful products and services to their customers.

Currently, there are two technologies covering this sector felica from Sony and mifare from Philips.

The value proposition of NFC is to unite these two technologies

‘Unite’ means ensure that readers of felica can read mifare cards and vice versa. This could be VERY interesting

Obviously, the next step is to put in a mobile phone and all sorts of applications are possible.

Interestingly enough, NFC founding members include players from across the spectrum

Again, from the NFC forum website ..

As a group, the NFC Forum’s Sponsor Members represent the leading players in key industries in all the major regions of the world. The Sponsor Members are: MasterCard International, Matsushita Electric Industrial Co., Ltd., Microsoft Corp., Motorola, Nokia Corporation, NEC, Renesas Technology, Royal Philips Electronics, Samsung, Sony Corporation, Texas Instruments and Visa International.

i.e. this includes credit card makers, device manufacturers and others like Microsoft.

Missing in action are the operators. Some have pledged support – but overall it’s lukewarm.

Time will tell .. if NFC will be a success or yet another initiative which will not take off.

What do you think?

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