The is part two of my post on near-field communication. Part 1 looks at the key players driving NFC forward, and this post looks at how NFC works, the barriers to success, and the possibilities for marketers and brands.
So how does near field communication work?
As the name of the technology states, it is the communication of two devices, sharing data, by a distance of centimeters. Data sharing doesn’t have to take place between two handheld mobile devices. Data can also be shared between a mobile device and another target – for example a point-of-sale system. This is what gives NFC huge potential.
Difference between NFC and RFID
In the first post I talked about NFC and RFID as if they go together like peas in a pod. They work on the same ideas, but there are some fundamental differences. NFC is an extension of RFID communication, but as mentioned above, NFC is a centimeter technology. RFID works at a range of meters. As a result this is why – for security reasons – you’ll find mobile devices equipped with NFC.
How are phones enabled with NFC, and how would I use NFC for a marketing campaign today?
Developers have understood the possibilities that NFC offers for a while, but so far the technology has failed to reach its full potential. The main reason for this is that NFC enabled mobiles are still in short supply. There are currently only three phones in the UK that are NFC enabled – the Samsung Tocco Lite, the Tocco Quick Tap and the Google Nexus S.
There are three ways that NFC can be enabled onto a mobile phone:
- Manufacturer Integration – the phones mentioned above, as well as new handsets such as the hotly rummoured iPhone 5/4GS, will have NFC fully integrated into the device. The two parts include an NFC controller and a secure element
- SIM Card Integration – NFC can be embedded into a SIM card. As mentioned in the first post, the London 2012 partnership between VISA and Samsung will rely on VISA-enabled SIM cards
- microSD Card Integration- yup, NFC can also be integrated on this removable storage device. Visa’s implementation of NFC has typically used microSD cards, which are either inserted into devices’ card slots, or woven into specially designed sleeves, like those made for the iPhone
If the wheels are already in motion for an NFC campaign, and you’re still not sure about the how’s and why’s, think of NFC as an advanced QR code campaign. Unlike QR codes though, NFC doesn’t require you to find an app to read the code and fetch the data. That makes NFC much faster. QR codes are also read only. NFC can be read/write, and peer to peer.
Google are the first to admit that NFC is not even on the marketing radar of most companies. Although they’re confident NFC will surge in popularity over the next few years, how are they planning on tackling the ‘my phone doesn’t have NFC’ conundrum? The answer, in a word, is stickers. Back in May 2011, Google’s Osama Bedier suggested users will be able to obtain special NFC stickers with a single credit card (a la Google Wallet) associated with them. Transactions made using the sticker will be communicated to the Google Wallet app on a users phone.
With their new NFC-focused Ice Cream Sandwich launch, Google are promoting ‘0-click interactions‘. Simply swipe your NFC enabled Android phone over an NFC tag – in a sticker, on a product, on a poster, in a magazine, at a point-of-sale – and grab or send the data.
Google and RIM aren’t the only ones to take the sticker route. UK sandwich and coffee shop chain EAT (in partnership with Zapa Technology) plans to trial a loyalty program using stickers customers can attach to the back of their mobile phones. Allow the point-of-sale terminal to read the chip, accumulate points, receive loyalty offers and discounts. Marvellous.
So stickers it is. But the last time your marketing boss was involved with stickers was probably when he was collecting for the 1988 Panini sticker album, so it’s worth arming yourself with a few ideas as to how NFC could work in theory.
The Potential for NFC – Open the Mind
Combining NFC technology and the smartphone boom provides huge potential to combine the physical, virtual, online and mobile retail spaces.
At the moment most NFC and technology advocates are talking about NFC for mobile devices. But take this further to cars, TV’s and properties and the potential is unlimited. Your phone not only becomes your digital wallet, but also your car key and your house key.
Let’s not get carried away just yet. Whilst half of all smartphone owners now shop online via. a mobile device, mobile payments and NFC still have a long way to go.
Potential for Retailers
We’ve covered the potential for charities and social remarketing with NFC in another blog post, but for me the ultimate potential lies in retail. VeriFone is aiming to add NFC to many of it’s new point-of-sale terminals and upgrade existing systems to support NFC. This is good news, but NFC holds potential for retail stores to do so much more than payment, as my quirky sketch below shows…
All the data stored within your phone and your apps provides context. Your location, your search history, your phone model. Combine that contextual data with new information – in-store navigation, personalised marketing, behaviour tracking, loyalty activity, coupon capture, point-of-sale purchases, advertising channel – to create a highly compelling consumer experience to boost sales and create a stronger link between each customers and retailers.
Potential for Travel
Any type of check-in – hotel, flight, car hire – is now made seamless with NFC. QR code check-ins may disappear almost as quickly as they’ve arrived. Imagine checking into a hotel – swipe your phone, receive your booking details and your room number, and use your phone again to navigate the hotel and then enter your room.
Potential for Socialising and Dating
Unlike QR codes, you can read and write to some NFC tags. The Google Android Gingerbread platform has developed APIs for tag read and tag write. Tags can also be re-programmed and re-written. On the Android platform, this application is known as Sticky Notes. This means when you scan an NFC tag, it allows you to type a message to the tag. The next person who scans the tag then reads your message. Imagine you’re at a speed dating event. You sit across from each potential date, scan the NFC tag, and read the last comments about that person. If you’re a romantic, you could also leave messages in sticker tags in different geographic locations for others to hunt and find.
Barriers to NFC Success
Whilst there’s huge potential for NFC, there’s also some barriers for national and international uptake:
- Point-of-sale system hardware updates - NFC transactions require merchants to upgrade point-of-sale systems. VeriFone is working on this, but the new systems still need to be adopted and installed within companies
- Limited number of NFC enabled phones – at the time of writing, there is literally a handful of mobile devices capable of NFC activity. This could all change if the new iPhone 5 is NFC enabled, and if the new LG and Android devices come NFC equipped. A full list of NFC enabled phones can be found here
- Personal Security – if mobile phones become the new wallet and store keys, credit cards, house keys, car keys then there needs to be some big security changes. In the UK, up to 15,000 mobile phones are lost and stolen every month. That’s a lot of personal data which could fall into the wrong hands. On the plus side, the security of an NFC enabled phone should be no worse than a credit card. In addition, a recent initiative between NXP Semiconductors, AuthenTec and DeviceFidelity is hoping to ensure fingerprint sensors are present on all NFC enabled Android devices as early as next year
- Privacy – if NFC can tap into apps and access personal data, the inevitable ‘p’ word will crop up. By it’s very nature, it is plausible that retailers will load ads, coupons or adware directly onto the phone itself during the NFC transaction, bypassing the Internet…which may pave the way for some new mobile privacy laws
There’s no doubt that NFC holds huge potential. The next few months will provide interesting viewing, especially if the iPhone 5 is released with NFC technology embeded.
NFC can also combine the physical, virtual, online and mobile retail spaces. Taking this further, your mobile device can connect data to cars, TV’s and properties. Your phone not only becomes your digital wallet, but also your car key and your house key.
There are many potential benefits, but NFC technology must not come at the expense of privacy and security. The key stakeholders mentioned in part 1 have a large role to play in ensuring NFC becomes a safe and enjoyable addition to mobile consumer electronics, retailing and marketing.