All there is to know about NFC

Near-field communication (NFC) has been slow to catch on in Australia; gradually, however, the technology is making its way in. The Commonwealth Bank introduced its NFC app Kaching six months ago; the NSW Government recently released an NFC tourism initiative down at The Rocks; and RIM is integrating it into its newer smartphones.

However, it's not something with which the wider Australian public is particularly au fait yet. What is it? What can it do? And how will we be using it in the future?

Many of us think of NFC as a tool solely for mobile payments — its implementers included. The Commonwealth Bank describes it as "the technology that enables you to pay others or make purchases at stores using your smartphone". But, as the campaign at The Rocks demonstrates, it's capable of more.

Developed by Tapit, the campaign uses QR codes and NFC tags, scattered around the location, to let users take an interactive, self-guided tour.

"In layman terms," said Jamie Conyngham, CEO and co-founder of Tapit, "you get a phone out of the box, and you can tap things with it for payment; or, in our case, to get content and information. It's like smart cards or contactless payment cards around the world, except that technology is in your phone."

The technology itself is embedded in a chip, which is either part of the phone or part of a case. RIM, which is rolling out BlackBerry smartphones with NFC chips, told CNET Australia, "NFC is a short-range wireless communications technology designed to build on existing HF (13.56 MHz) contactless and RFID technology."

In other words, the phone generates an electromagnetic field, which induces a current in the communicating device (such as Tapit's NFC tags, or a payment console) when the two are brought into proximity. This allows information to pass between the two chips.

"With the Tapit platform, we encrypt tags and enable various objects," Conyngham said. "When people tap these objects, they are directed to our servers via the phone's 3G/4G or Wi-Fi connection; our servers then serve them content specific to the location ID of the object. For the user, the experience is fast and no pain. They simply tap, and then like magic they get content/information on their phone. The content can be changed dynamically, so once the object is enabled, we can change the content at any time without changing the tags. The implications of this are enormous. A timetable for public transport could be updated once to our systems; this then updates 10,000 Tapit points in minutes. A Tapit brochure point means that brochures can be updated regularly without the need for printing new ones."

It sounds amazing, but the first NFC-enabled phone arrived in the world in 2006. One has to wonder why the technology has been a little slow on the uptake.

Part of the reason has to be expense; it's not cheap to upgrade payment terminals Australia-wide, and phone manufacturers have been reluctant to adopt a new component where the complementary technology has not yet been implemented. Apple, for example, is only rumoured to be including NFC chips in the iPhone 5 — although Sony, Samsung, HTC, Huawei, LG, Motorola and Nokia are all on-board.

"We are seeing NFC payments start to increase in popularity with customers," the Commonwealth Bank said. "However, part of the journey is how consumers are embracing contactless payments as a whole — we are essentially at a tipping point. In Australia right now, there are more than 100,000 contactless terminals, and, as large retailers such as Woolworths and Coles roll out these terminals and this payment method takes off, so too will NFC payments."

The Commonwealth Bank, though, has been slow to roll out NFC on Kaching via Android devices — it has a special NFC case for iPhones — due to a lack of security, citing Google's tardiness with the Secure Element code (more on Secure Element below).

Conyngham, however, disagrees that uptake has been slow.

"NFC payments are predicted to be one of the fastest technology roll-outs ever," he said. "Some analysts have predicted that at least half of all phones sold in 2015 will be NFC enabled, or approximately 863 million devices sold that year."

Still, that's three years away — and even Conyngham acknowledges that educating the public on what NFC can do is a hurdle.

"The main challenge we have is education of the market as to what you can do with NFC — and waiting for the market to have NFC-enabled handsets," he said. "More and more NFC handsets come onto the market every month, but still people need to know what to do with them. That information needs to come from the huge carriers, device manufacturers and payment providers."

Well, there's that — and the potential concern about security. If a tap is all it takes to make a payment, what's to stop a wayward phone thief from going crazy, Broadway style?

"Consumer perception of how secure NFC is is the most common concern, but in fact there is little reason for them to worry," said the Commonwealth Bank. "CommBank Kaching incorporates a range of measures, which in combination deliver high standards of security and provide customers with peace of mind when making mobile payments."

These measures include customer authentication, device-level security controls, monitoring and a security guarantee — that is, if any unauthorised monkeyshines occur, CommBank will 100 per cent cover any losses incurred — on the proviso that the customer has protected PIN and password, and notification of said monkeyshines is immediate.

RIM, which was the first phone manufacturer to receive MasterCard NFC certification, has built a few safety features into its NFC-enabled smartphones. It uses something called "Secure Element", a SIM-based security feature, to house NFC credentials. "SIM-based payments use protocols and cryptography defined by the payment schemes (such as Visa or MasterCard) to ensure the security of the payment. The credentials themselves are protected within a secure container called a Secure Element, which is located within the SIM card."

In addition, RIM said, "Applications, such as a mobile wallet, can build in additional security, such as passwords, to prevent unwanted access; and NFC payments are protected by all of the existing fraud mechanisms for traditional credit cards."

But banking and transactions are the baby steps to a much larger system that could see us using our phones to download information from access points all over Australia.

"Mobile NFC services can transform smartphones into contactless devices for touch-and-go applications that make the basics in life much simpler," said RIM. "Transport ticketing, payment, loyalty and other innovative services like smart posters, peer-to-peer or access control. RIM is determined to drive forward this ecosystem, taking our partners with us, as we work together to put the magic that NFC can enable into the hands of more users in markets around the world."

Conyngham added, "We see people being able to tap lots of different objects when they are out and about, street furniture for outdoor advertising, maps, brochure dispensers, shop windows, store shelves, transport stops, products — basically everything of interest could be a bridge between the physical world and the digital world. By tapping, you get information about a product or service, or you could be getting directions, coupons, entering competitions, getting videos, audio streaming, downloading an app, timetables, brochures, checking in, contact details, following, liking ... the list goes on."