Near Field Communication (NFC) is a technology that is becoming more commonplace in Kenya and is likely to be adopted in many different countries in the near future. The technology works by transferring data over a short distance using radio frequency identification (RFID); in a similar way in which we use Wi-Fi networks and Bluetooth.
Mobile phone developers have been working on and launched a range of smartphones where near field communication hardware has been pre-installed which than allows its owners to use their phones as virtual wallets and credit cards; replacing their everyday need for cash and cards, particularly for low value transactions.
Globally, the technology has been trialled and implemented in a range of situations. In Kenya’s capital city, Nairobi, Google has worked in partnership with a transport business, Citi Hoppa, on a product known as Beba Beba, where mobiles have been used to pay for bus journeys on routes around the city. The system is simple, as the bus conductors are provided with a mobile phone which is NFC-enabled and is used to collect the fares automatically from the bus users. This has the potential to reduce security risks for the bus company as the bus will carry less and potentially no cash in the future whilst also offering the benefit of convenience for the traveller.
From the trials carried out to date, it appears that the technology is gaining pace in Africa, which has seen Oberthur Technologies partnering Airtel to bring the technology to Africa, a move which was announced at last year’s Mobile World Congress in Spain.
Kimani Waiganjo, who works at Bright Connections, an internet company in Kenya and commented that:
“Near Field Communication is dependent on the adoption and availability of NFC- compatible smart phones among consumers…The reason that it is so widespread in more developed countries is that smart phone penetration in those countries is deeper and when retailers and service providers install NFC -scanning hardware, they are sure to have clients who will make use of them.”
A virtual wallet means that consumers could potentially carry no physical cards or cash with them and instead they would just load their mobile phones with cash, which when passed in front of an NFC scanner would just deduct the sum of money that they owed from their transaction.
Google Wallet is a virtual wallet system which retains your credit and debit card numbers in addition to any details of loyalty cards that you may own which can then be used at an NFC-enabled terminal. Google Wallets partner is MasterCard and it is interesting to note that the technology seems to be gaining momentum in countries that you may not expect, rather than for instance the United States where consumers can spend lots of money and also like new ideas and technology but it seems that the people that have the money and those that like to embrace new technology are in fact different people. As a result MasterCard have compiled a Mobile Payments Readiness Index on the basis that:
“Willingness to make mobile payments increases with income but decreases with age.”
Based on the consumer readiness measure, the United States is ranked as tenth, with Kenya first, followed by Nigeria, Philippines, Saudi Arabia, China, Egypt, Thailand, Vietnam and South Korea.
Concerns questioning the security of the system seem only natural, but as no third party is actually involved in the transaction which takes place between your mobile and a receiving device using only radio frequencies, companies are trying to assure consumers that it is a secure method of payment.
So it seems that the technology may not be far from becoming an everyday part of our lives; potentially enabling us to pay for shopping at the supermarket, paying for your train fare or a bill in a restaurant just by waving your phone near the till instead of using cash or swiping a card and inserting a password.
There is range of phones currently available in the UK which have NFC compatibility, the most common and popular being the Samsung Galaxy S3; a piece of technology that was widely marketed during the Olympics given its position as one of the official Olympic sponsors. A novel application that they launched using it was the ability to pass the Olympic flame between other S3 users that were nearby, with just a tap of their phone.
It is also widely anticipated that Apple’s next phone launch, the iPhone 5 will also take advantage of NFC technology, a rumour that has been based on Apple’s intention to launch the Passbook application which will store details of your loyalty cards, concert and gig tickets, airplane tickets and other passes digitally.
It will be interesting to see just how quickly the new technology is adopted both globally and in the UK, but the system requires a greater degree of support from shops, credit card companies and banks before it will be able to truly compete with our tried and tested credit and debit cards.