Will NFC succeed Where RFID failed?

Five years ago, Radio Frequency ID (RFID) seemed posed to revolutionize commerce.   Way back in 2003, Wal-Mart announced that it would be requiring that RFID tags – so called “electronic barcodes” – be attached to virtually all merchandise.  Many– myself included – became convinced that the Wal-Mart directive would be the tipping point leading to universal adoption of RFID tabs in consumer goods and elsewhere. 

RFID tags are superior to barcodes in that they can be scanned from a distance without requiring line of sight laser technology.   The potential applications of RFID technology are many, but in business this promise of perfect supply chain and inventory management seemed to provide an irresistible economic driver for rapid adoption.

But RFID failed to meet expectations, and, while there are some notable real-world examples – electronic passports for instance –  RFID adoption has not advanced anywhere nearly as fast as was first hoped (or feared). 

The potential advantages and some of the technologies of RFID have resurfaced recently in Near Field Communication (NFC) technology.  Like RFID, NFC provides communication via a short distance radio from either a powered device – such as a cell phone –or a passive RFID-like tag.

Unlike RFID, NFC allows for two-way communication, although it supports a significantly shorter range – only a few millimeters.  While RFID can be detected in a car passing a toll point, NFC really requires the two devices to be almost touching.  However, unlike RFID, both parties can be active participants in the interaction.  For instance, two cell phone users can exchange contact details by “bumping” their phones.

NFC has been available in Android phones for quite some time, and there are some interesting, though arguably trivial, applications.  For instance, the Samsung Galaxy allows you to position NFC-enabled “TecTiles” at key locations such as your car, your bedside, or your office.  When the phone detects that it is in range of the TecTile, it can be programmed to take actions such as disabling Wi-Fi, sending messages, launching applications, etc.

The biggest promise for NFC, however, is in mobile payments.  NFC-enabled payment systems would allow you to pay using your NFC-enabled phone instead of a credit card.  In the future, you may be able to unlock or start your car using an NFC-enabled device.  Because your cell phone can identify you using biometric or another identification paradigms, the risk of someone stealing your wallet or keys would be minimized.

Android phones such as the Samsung S3 already incorporate NFC technology.  The Microsoft Windows 8 phone OS provides an NFC-enabled wallet that can include not just credit cards, but also tickets, Frequent flyer and other loyalty cards, as well as contacts.

Rumors that the iPhone5 would include NFC turned out to be misplaced.  NFC was notably absent in the new iPhone, although Apple did include a Passport application which allows you to embed tickets, boarding passes and credit cards.   

Had both Apple and Microsoft included NFC in their phones, then NFC might have hit a critical mass on the consumer side that would have led to widespread adoption by retailers.  As it is, it seems we are stuck in that “chicken or the egg” conundrum.  NFC is not widespread enough in mobile to motivate retailers to adopt it, and, until retail adopts, it won’t be attractive to companies like Apple.  I believe that eventually, we’ll routinely use our cell phones in place of keys, credit cards, TV remotes, and so on.  It remains to be seen, though, whether NFC will be the enabling technology.