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NFC technology is beginning to be embraced by smart phone manufacturers and apps like Google Wallet. NFC will gain more widespread use around the world and will revolutionize the way smart phones are used.

Near field communication, or NFC, has spread throughout Japan and has started to come to other countries, including the United States. NFC technology is based on the same technology as store security tags. Just as a radio signal from a security tag will activate an alarm, a radio signal can transmit information between two devices if the devices are tapped together.

NFC: A World of Possibilities

When a mobile phone is tapped against a credit card reader, the credit card reader can collect credit card data stored on the mobile phone and make a purchase. Customers no longer have to carry their credit cards or stand at the checkout counter digging through their wallets for the right card. Instead, a simple tap completes their purchase. One application that is taking advantage of NFC is Google Wallet. Google Wallet stores credit cards, gift cards and coupons. An NFC-equipped phone that carries Google Wallet can be tapped against a checkout station at any store. Customers simply type in a PIN to choose their form of payment.

Not all smart phones are equipped with NFC chips, which is a major obstacle to wide-scale implementation. However, Sprint has partnered with Google Wallet, and three other carriers will carry another NFC platform called ISIS. Samsung plans to sell an NFC-equipped version of the Galaxy S II in late 2011, and other phones including BlackBerry, HTC, and Apple's iPhone 5 are likely to jump into the fray. Many experts expect NFC to penetrate the market by 2016, and retailers are looking forward to the way that the tap will speed traffic through the checkout line.

A Vision for the Future

Companies could implement NFC for a variety of purposes beyond simply collecting payments. For example, companies could store loyalty cards in apps like Google Wallet to provide rebates, points or discounts to customers at the point of sale. Also, retailers may use NFC on posters or shelftalkers to provide customers with instant coupons or other offers with one tap. Hotels could use NFC to allow guests to unlock the doors to their rooms. ISIS is planning to partner with the Utah Transit Authority in Salt Lake City to allow customers to pay for travel with a single tap at the turnstyle.

Security For Personal Information

NFC technology restricts communication to 4cm in order to prevent people from trying to steal customer data from the outside. Also, credit card and other data is encrypted and stored away from a phone's operating system on a separate chip, and the chip can only be accessed by certain programs. Google Wallet has a series of three PINs that customers must use to access their payment information. Because the success of NFC depends on the security of the process, companies are investing a great deal of capital in protecting sensitive information.