NFC, or near-field communication, allows for wireless transfer of data over short distances between two devices. This makes it an ideal technology for financial transactions between a phone and a device at a brick-and-mortar store.
While NFC is still in its infancy in the U.S., it is prevalent in Japan, where you can pay for almost anything by simply swiping your phone. There’s no need for credit cards, cash or even ID. Your smartphone is your wallet.
A lot of companies are betting that 2011 is the year NFC takes off in the U.S., and are working on their own NFC payment solutions. This list includes some very big players:
- Google: The search giant may be the farthest along of the big companies. Android already includes NFC support, but most Android phones don’t yet carry NFC chips. This hasn’t deterred Google from running in-store mobile payment tests. More recently, Google reportedly partnered with Mastercard, VeriFone and Citigroup to create an NFC payment system that could launch later this year. It also acquired NFC startup Zetawire last year.
- Apple: The iPhone maker is reportedly considering adding NFC to the iPhone 5, though rumors that it would be added to the iPad 2 turned out to be false. From what we’ve heard, Apple has been testing NFC payments on its Cupertino campus for months, but is unsure about whether it should be made available in the next edition of the iPhone.
- AT&T, Verizon & T-Mobile: Three of the four major networks teamed up last year to announce Isis, a joint venture between the networks to facilitate the addition of NFC technology into their phones.
- Amazon: The ecommerce giant is reportedly exploring the idea of its own mobile payment service to compete with Apple and Google. Amazon already has Amazon Payments, and has popular apps on both iOS and Android, but it doesn’t have an NFC product.
- Microsoft: The software giant is also reportedly getting into the mobile payments game. It hopes to get NFC into its OS this year, which would be a huge boost to its Nokia partnership. Nokia is already committed to NFC, and its reach could instantly make Microsoft a major player.
- Others: When talking about payments, you can’t forget PayPal, which has partnered with startup Bling Nation to add NFC-enabled stickers to people’s phones. Boku is another company to watch.
A Multi-Billion Dollar Industry At Stake
In a wide-open NFC mobile payment market, you can make a compelling case for any of these companies to become the dominant player. Google is moving faster than anybody else in the market, has a partnership deal with Mastercard and Citigroup, and controls the Android OS. Apple not only has iPhone, but it has iTunes, making it the company with the most credit card information on the web. Microsoft may be behind in the mobile OS race, but its partnership with Nokia should fix that problem. And Isis alone controls more than 200 million wireless subscribers and hundreds of millions of handsets.
And then there’s Amazon. While it doesn’t control a mobile OS or millions of smartphones, it does have the most payments experience and clout of the group. It has also proven adept at developing strong mobile apps. And even more important is its potential ability to convince brick-and-mortar stores to include its own NFC devices in their stores.
It’s easy to see why all of these companies care about NFC. It’s potentially game changing technology. As Mashable‘s Sarah Kessler explained last year, NFC could be used in payments, transportation, health care, smart objects and social media. Each one of those industries is a multi-billion dollar market on its own.
The NFC battle is going to be waged over years, or even decades. The stakes are simply too high for anyone to let a competitor dominate the market.