What is NFC?

Near field communication, or NFC, is a way of sending information by touching or holding two compatible devices closely together. The technology isn’t new; London’s transport network has made use of similar technology for its Oyster system since 2003. This enables travellers to touch a card against a symbol to pay for travel on buses, trains, trams and the like. Barclays has also recently introduced a ‘tap and pay’ card system for its banking customers.

A similar technology is now coming to smartphones, which will enable people to pay for items, send information or even unlock their door. But is NFC reliable enough to change the way we pay for goods and services?

What can NFC be used for?
One of the main advantages of NFC is that it can be used for lots of different things. Information such as contact details, a photo or directions can be shared with friends or co-workers by touching two NFC phones together. NFC can also be used to pair peripherals such as wireless headsets. In the past this involved fiddly pairing via Bluetooth – a short-range wireless standard – but NFC makes the process simpler.

The possibilities don’t stop there. NFC chips can also be put in security systems so they could be used to open doors. NFC could also be used for advertising or providing extra information – enter competitions, collect coupons or get more details about a product by touching a phone against an NFC point.

As the signal travels such a short distance – no more than a few centimetres – NFC is also secure. As Wifi or Bluetooth travel over longer distances there is greater opportunity for someone to intercept the information.

Is it secure?
Despite it seeming safe, there are security concerns about NFC, especially if it is used to turn smartphones into virtual wallets. Dave Mahdi, product marketing manager at Entrust, says NFC could be a target for criminals as it becomes popular.

He said: “Where customers go, cybercrime will follow. The challenge with NFC is identity security - and the ‘weak link’ can be down to the pin and password combination, which authenticates the user’s identity.

“The problem is, for every innovation we see, there will be criminals working to exploit it and security must adapt. But, in principle, using your mobile phone to make payments is actually no more risky than using a chip credit card.”

The fallibility of contactless payments and mobile wallets has already been exposed. In late March, an investigation by Channel 4 News found the contactless payment system used in the latest Barclaycards could be easily compromised using an NFC smartphone. The chip used in these cards isn’t an NFC chip but it still highlights the problems of contactless payment systems.

Despite the concerns, Mr Mahdi still thinks NFC will soon be widely used in daily life, mainly because it is simple and has lots of applications. “Overall, it is easy to use and I think tapping on things with your phone to make a purchase will become commonplace. From a day-to-day standpoint it would make people’s lives easier,” he said.

Smarter phones
We’ve seen two examples of NFC at trade shows earlier this year: Yale showed a lock that can be opened with a NFC smartphone, while ARM demonstrated a payment system that can transfer money between smartphones.

At the moment, there are around 20 NFC-compatible smartphones available, including the Blackberry Curve 9380, the Samsung Galaxy Nexus and the Nokia 603. Telecoms analyst Juniper Research estimates that one in five smartphones will be NFC compatible this year.

As more handsets become available, more companies take an interest. Mark Fraser, CEO of Zappit, a company working with NFC, says he expects the technology to be “much more mainstream” by the end of this year, adding that businesses are now taking NFC very seriously. Mr Fraser also says the simplicity of NFC could well see it succeed where other technologies have failed.

“Bluetooth was mostly about pairing devices and never really took off,” he says. “NFC is more flexible and can facilitate Bluetooth pairing. Such ease of use, and the fact it works without downloading an app, means NFC will outgrow other technologies.”

While some will find the idea of a mobile wallet unsettling, it looks like NFC will have a big impact on smartphones over the coming years. A more versatile phone is convenient but also attractive to hackers or thieves if security isn’t good enough.

Inevitably, criminals will try to take advantage of NFC and much work will be required to ensure the technology is secure. Persuading people to put their wallets into their phones may still be quite a hard sell.