A World Without Plastic: NFC and the Future of Credit Cards
Imagine a world where your pockets aren’t packed with plastic, where you can’t play 52 Pickup with the contents of your wallet. Imagine never forgetting your coupons at home or having to thumb through thick stacks of store rewards cards just to earn a couple extra points. Imagine your every coupon, card and key consolidated into a single mobile device. That’s the future of personal finance. That’s NFC.
NFC, or Near Field Communication, will transform the way we buy, sell, learn and communicate. It’s coming fast, and it’s coming hard. We talked to David Holmes, vice president of NFC Solutions at Identive Group, to get a firsthand account of NFC from an industry leader. In his estimation, everyone and their uncle will be using the technology within the decade. Visa credit cards are already being prepped for NFC compatibility.
Near Field Communication enables data transfers and monetary transactions via wireless connections between two devices. It allows you to use your cell phone for, well, just about anything. According to David Holmes, the possibilities border infinity. Holmes breaks the applications down into three primary categories: transactions, discovery and exchange.
Using NFC, you’ll be able to use your cell phone as both a credit card and a coupon book. You’ll be able to go into a store without pulling out your wallet or fiddling with crinkled scraps of paper torn from newspapers. You simply your hold your mobile device to the store’s NFC reader and, without even making contact, you transfer your coupons and credit card information electronically. Holmes predicts a day in the not-so-distant-future when card issuers will distribute electronic NFC copies of credit cards alongside the traditional plastic version. Much in the way many movies offer a free digital copy when you buy the DVD or Blu-ray, credit card issuers will give you both a physical card and a copy for your phone. Store rewards card will likely adopt a similar model, meaning no more key rings full of membership cards you never use.
Wireless Internet makes knowledge available in abundance, but NFC adds another dimension to information accessibility. Rather than logging onto Wi-Fi networks and using search engines to track down a particular fact or detail, NFC grants instant access to vital information. Holmes uses the example of a train station. NFC allows users to walk into the station and use their devices to instantly download a schedule or route map. The data is stored on the device and ready to use regardless of Internet access. Or if you’re exploring a museum and want more information on a particular display, you can touch your device to an NFC sticker and have a digital pamphlet zapped into the palm of your hand.
Technology is sometimes attacked for its tendency to supplant actual face-to-face social interaction. But NFC is a technology that will actually encourage and facilitate communication on a more personal level. NFC only works when the participating devices are in close proximity to one another, so peer-to-peer NFC exchange is more intimate than, say, e-mail or texting. By simply bringing their mobile devices together, people can wirelessly transfer contact information and business cards. To add a friend on Facebook, you’ll be able to hold out your phone and make an instant connection (rather than waiting to see who will creepily track down the other person first). NFC peer-to-peer exchange will make it easy to swap data during day-to-day social interactions. If you want to give your friend a playlist or recipe, you don’t have to wait until you get home to send off a link. You can do it then and there while it’s still fresh in your mind.
Safety and security
As exciting and limitless as the technology is, not everyone is sold on NFC. Not yet. Because it’s built on the concept of contactless data exchange, the threat of interference and eavesdropping is always present. Not everyone is head-over-heels about sending credit card information through open air. But David Holmes is confident advances in NFC security options will abate these concerns. He believes problems stem from “how the cards are implemented rather the technology itself.” With the development of credit card user interfaces, security options are available and effective, but if people choose not to utilize them, they put themselves at greater risk. The user has the power and responsibility to find a balance between safety and convenience.
Paving the way
Though NFC is on the verge of infiltrating virtually every life and wallet across the nation, the technology has been around longer than you might think. Contactless data transfer has been used in public transportation for years, and the technology is already mainstream in Japan. But before it can properly permeate the United States, the infrastructure has to be in place. Unless users can actually implement their NFC devices, they have little reason to obtain the technology. “Nothing will drive contactless infrastructure like mobile phones,” Holmes says. As more and more merchants install NFC readers to accept contactless payment, phone manufacturers are preparing mobile devices for future NFC applications. By the end of 2011, 12 new phones with NFC capabilities will be on the market.
While NFC isn’t expected to change the fundamental operations of credit cards, it will certainly redefine our conception of what a credit “card” is. The essence and functionality will remain the same, but the physical embodiment of something as intangible as credit will never be the same. It will be interesting to see the impact NFC has on things like travel credit cards and gas cards—whether issuers will offer incentives for utilizing NFC in conjunction with rewards credit cards. Change is coming, and it’s coming soon. David Holmes believes once people know what NFC is all about, it will be “the most quickly adopted technology we’ve seen in a long time.”