Friday, May 27, 2011

NFC coming a phone near you...

Yesterday Google announced it's Google Wallet (and was sued the same day by PayPal/EBay). Using a mobile wallet is intriguing and possibly much more secure than what you currently carry in your wallet, I'm sure almost anyone reading this has at least one credit card that uses this same technology. If not a credit card a badge to get into a building, a smart card for metro or a key fob to get into their car or building.

The technology that's used is called NFC (Near Field Communications), NFC is built off the RFID standard (yes another acronym). RFID (Radio Frequency Identification) is used in almost anything your purchase, using RFID a retailer, like Target, can automatically scan merchandise as it comes into the store and as it hangs on the racks or sits on shelves. If you look closely at labels on boxes, books, clothes, etc... you'll see what looks like a gold circuit, this is the RFID chip. RFID is a passive communicator, it sits there and when it's called upon, it answers, it doesn't need it's own power source, it gets it's energy from the message that's sent to it.

NFC is like RFID, it's a chip that sits on your credit card, security badge, key fob, and soon your phone. Unlike RFID a NFC chip needs to be with a few inches of the transmitter/receiver to work (hence the word "Near" in it's name). This is why when you're in your office or riding the metro sometimes the doors or gates won't open for you, you didn't get close enough with the card. Outside the office you or metro you'll see these almost every time you go shopping, the PayPass technology employs this and as I mentioned above, if you pull your credit cards out of your wallet, at least one will have this technology. PayPass is one of the partners that Google has teamed with.

As I've mentioned and as Google/Apple/Microsoft/RIM/etc... wants, you will soon have this technology in your phone. They will put the chips in the phone and you'll be able to use this technology for a number of different tasks. Everything from buying gas/dinner to opening your home/car door. No longer will you need to carry cash or even credit cards, it'll all be there for you. Also if you don't want to use the chip, you don't have to use it.

I think everyone's fear is "what if I lose my phone?"... Well as I think about it (and I've thought about it for a while now), I think this will ultimately be more secure than carrying your credit card, what happens if you lose your wallet? Well you lose your credit card, your id, your cash, etc... None of which is secure. All of these cards most likely use some sort of NFC chip anyway, so any holes that exist in NFC are already there, having them on your phone doesn't make the system any weaker. I would argue that it would actually make the system stronger to have it on your phone since you could add an additional layer of security by putting a PIN on your phone. If you lose your phone, well without your PIN all of your cards are useless immediately, if you lose your wallet, your cards are still valid until you call in to stop your account, which usually means getting home or somewhere to look up your account information. From the time you lose your wallet to the time you call it in, it could be several hours or days.

For a wallet this is just getting started, let's say your son or daughter is at the movies or driving or whatever and they need some money quick. Using a virtual wallet you'd be able to update their account on the fly from your own phone (this is already being done with PNC Bank). For those who don't like using Credit Cards because they lose track of what they are spending, you may be able to set daily, weekly or monthly limits on what you could spend (I'm not sure about you, but I'd REALLY like that for myself).

I think the biggest hurdles for this technology will be legal hurdles (such as they lawsuit by PayPal) and standardization (Apple is coming out with their own standard, if they do this could be a reason for me to leave my iPhone for an Android device). I think if we can get over the hurdles, you'll not only be seeing your credit cards come to your phone, but also your drivers license, smart cards, car keys, house keys, etc... come to your phone. When you go to the beach all you'll need to do is make sure you keep your phone dry ;-).

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