An Overview on the status of Near Field Communication Technologies

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Abstract

Near field communication is a technology for transmitting over short-range distance. The fact that possible targets do not require batteries and can be relatively small makes such technology a good candidate for supporting mobile payment systems. The paper provides an overview of the technology and its perspectives for mobile payment systems.

Introduction

Credit cards have become one of the most common forms of payment for commercial transactions. As an example, in North America almost 90% of online business-to-consumer transactions are made with this payment type. Online merchants have to comply with stringent rules stipulated by the credit and debit card issuers (Visa and MasterCard), in terms of security protocol and procedures in place to ensure transactions are more secure. This can also include having a certificate from an authorized certification authority (CA) who provides PKI infrastructure for securing credit and debit card transactions.

However, despite this widespread use in North America, there are still a large number of countries such as China, India and Pakistan that have some problems to overcome in regard to credit card security, that are currently limiting the adoption of credit cards. In other areas (mainly in developing countries in Africa), the personal cellphone is already the gateway to remote banking services through SMS. This represents a major advantage for people to facilitate the usage of banking services centralized in the capital cities and few others in a scenario where population is widely spread over large areas with almost no services.

In parallel to credit cards, the use of smartcards has become extremely popular. In principle, a Smartcard is similar to a credit card; however it contains an embedded 8-bit microprocessor and uses electronic cash which transfers from the consumers’ card to the sellers’ device.

As electronic commerce is evolving, there are also companies that enable financial transactions to transpire over the Internet, such as PayPal. Many of the mediaries permit consumers to establish an account quickly, and to transfer funds into their on-line accounts from a traditional bank account, and vice versa, after verification of the consumer's identity and authority to access such bank accounts.

In this multi-faceted scenario, the incoming Near Field Communication (NFC) technology seems a good candidate for supporting further evolution of e-commerce transactions, towards an era when the smartphone will not only be a portable computer but also a personal mobile wallet.

The paper provides an overview of NFC and its current deployment status, underlining the potential and perspectives for adoption of such standard in every day life of the society.

What is NFC?

Near field communication, or NFC, includes a set of short-range wireless technologies, operating at a distance of 4 cm or less.

NFC is an open platform technology standardized in ECMA-340 and ISO/IEC 18092. These standards specify the modulation schemes, coding, transfer speeds and frame format of the RF interface of NFC devices, as well as initialization schemes and conditions required for data collision-control during initialization for both passive and active NFC modes. Furthermore, they also define the transport protocol, including protocol activation and data-exchange methods. The air interface for NFC is standardized in:

·         ISO/IEC 18092 / ECMA-340 Near Field Communication Interface and Protocol-1 (NFCIP-1)

·         ISO/IEC 21481 / ECMA-352 Near Field Communication Interface and Protocol-2 (NFCIP-2)

NFC operates at 13.56 MHz with datarate ranging from 106 kbit/s to 848 kbit/s. Most of the RF energy is concentrated in the allowed 14 kHz bandwidth range, but the full spectral envelope may be as wide as 1.8 MHz when using ASK modulation.

NFC architecture is composed of an initiator and a target, where the initiator actively generates an RF field that can power a passive target. For such reason, NFC targets can have very simple form factors such as tags, stickers, key fobs, or cards that do not require batteries, even tough NFC peer-to-peer communication is also possible (i.e. both devices are powered).

NFC employs two different codings to transfer data: if an active device transfers data at 106 kbit/s, a modified Miller coding with 100% modulation is used; in all other cases Manchester coding is used with a modulation ratio of 10%.

NFC devices are able to receive and transmit data at the same time. Thus, they need to check the radio frequency field and can detect a collision if the received signal matches the transmitted signal's modulated frequency band.

In contrast to Bluetooth, another widely deployed low range wireless communication standard, NFC is compatible with existing passive RFID standards (13.56 MHz ISO/IEC 18000-3). NFC requires comparatively low power, similar to the Bluetooth V4.0 low energy protocol. However, when NFC works with an unpowered device (e.g. on a phone that may be turned off, a contactless smart credit card, a smart poster, etc.), the NFC power consumption is greater than that of Bluetooth V4.0 Low Energy.

NFC technology is intended mainly for use in mobile phones. There are currently three specific uses for NFC:

·         Card emulation, where the NFC device behaves like an existing contactless card

·         Reader mode, where the NFC device is active and reads a passive RFID tag, for example for interactive advertising

·         P2P mode, where two NFC devices communicating together and exchanging information.

Several applications are envisaged, such as mobile ticketing in public transport, mobile payment (i.e., the device acts as a debit/credit payment card), smart poster (i.e., the mobile phone is used to read RFID tags on outdoor billboards), etc.

Market Perspectives

Interest in NFC technology is demonstrated by several active actions at international level, briefly summarized in the following:

·         The GSM Association (GSMA) has three active initiatives related to NFC:

o   the “Mobile NFC” initiative: fourteen mobile network operators, who together represent 40% of the global mobile market, back NFC and are working together to develop NFC applications. They are Bouygues Télécom, China Mobile, AT&T, KPN, Mobilkom Austria, Orange, SFR, SK Telecom, Telefonica Móviles España, Telenor, TeliaSonera, Telecom Italia Mobile (TIM), Vodafone, Deutsche Telecom and 3;

o   the “Pay buy mobile” initiative seeks to define a common global approach to using Near Field Communications (NFC) technology to link mobile devices with payment and contactless systems;

o   AT&T, Verizon and T-Mobile launched a joint venture (ISIS) intended to develop a single platform on which technology based on the Near Field Communication (NFC) specifications can be used by their customers to make mobile payments.

·         StoLPaN (‘Store Logistics and Payment with NFC’), a pan-European consortium supported by the European, is aimed at examining the potential for bringing together the new kind of local wireless interface, NFC and mobile communication;

·         The NFC Forum, a non-profit industry association, is working to advance the use of NFC short-range wireless interaction in consumer electronics, mobile devices and PCs. The NFC Forum promotes implementation and standardization of NFC technology to ensure interoperability between devices and services;

·         ETSI / SCP (Smart Card Platform), aimed to specify the interface between the SIM card and the NFC chipset;

·         GlobalPlatform, for the specification of a multi-application architecture of the secure element;

·         EMVCo, for the impact on the EMV payment applications.

Currently, several cellphones already support NFC, including products from Nokia, Samsung, Motorola, LG, SAGEM, Google. Therefore, the technology is already available, waiting for the support from payment service providers.

IT giants such as Google and Apple are already in the field, as demonstrated by Eric Schmidt’s announcement in November 2010 that Android will support NFC starting from version 2.3 ("Gingerbread") [2], backed by the publication by Bloomberg of a report stating that Apple was actively pursuing development of a mobile payment system employing NFC [3]. New generations of iPhone, iPod and iPad products would reportedly be equipped with NFC capability which would enable small-scale monetary transactions.

Indeed, it seems Google is working on an agreement with MasterCard and  Citigroup to empower Android devices so that users can make purchases using their smartphones, turning a smartphone into an electronic wallet.

Though there are wide-spread apprehensions about the security of such payment methods and the financial risks related to it, it seems that NFC is a sophisticated and secure technology, thus making it difficult to steal financial data this way.

Conclusions

Near Field Communication represents an extremely interesting technology nowadays, that offers the possibility to modify the whole payment system and as a consequence people’s habit in money usage – maybe in a similar way the advent of the credit cars did in the past against “real” money.

Currently, it is possible to conclude that NFC promises appear credible, as major players in mobile services (Google and Apple included) are already working to make them real and tangible to the society. Given such effort, we’ll probably experience in the next months the first launch of smartphones/mobile wallets and soon be able to understand whether this will represent a clear breakthrough for the people around the world.

References

[1] “Near Field Communication”, Wikipedia, http://en.wikipedia.org/wiki/Near_Field_Communication

[2] Google’s CEO Eric Schmidt. "A Conversation with Eric Schmidt on Android phones". youtube.com.

[3] http://www.bloomberg.com/news/2011-01-25/apple-plans-service-that-lets-iphone-users-pay-with-handsets.html

[4] http://www.gizmocrave.com/5559-google-nfc-based-mobile-payment-mode-coming-soon/

About the Author

Fabrizio Granelli

Editor-in-Chief, ICaST - Associate Professor, University of Trento