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Can NFC make mobile wallet a reality?

An NFC chip installed in a handset enables the user to shop as he does with his credit or debit card. Also, it allows retailers to deliver apps related to their businesses directly to mobile phones.

Near Field Communication (NFC), which is expected to revolutionise mobile wallet, faces many challenges. Though only in the short term.

NFC is a short range wireless communication technology which allows communication between two devices up to 20 cm apart. NFC needs chips, software and an OS platform such as Android to operate.

Franco Bernabe, the chairman of GSMA had said in a press statement that NFC will not only enable mobile payments but also services and applications such as mobile ticketing, mobile coupons, and access to cars, homes and hotels.

For the layman, NFC chips, when installed in a handset, enable a user to shop as he does with credit or debit cards. Also, it allows retailers to deliver an app related to their business directly to mobile phones.

Users may not come across a lot of NFC opportunities right now as retailers will need to install expensive readers to enable the services, which they may be averse to doing as long as buyers prefer paying through credit or debit cards and cash.

NFC has three essential uses. One, it performs a credit card’s functions and copies its security aspects very well. Users just have to bring two NFC supporting devices near each other and the transaction is complete.

Another use of NFC is in peer-to-peer communication. If two phones are brought close to each other, they can communicate. It is different from Bluetooth because with NFC there is no need to pair devices to each other.

Even though some buyers are not entirely comfortable with the idea of paying with their mobile phones, the slew of news reports and announcements made at the recently held Mobile World Congress (MWC) 2011 in Barcelona indicate that NFC is being adopted by smartphone makers with great speed, and this may make NFC mainstream very soon.

NFC can also be used by retailers to deliver apps related to their business directly to mobile phones. Once an app has been noticed, retailers may benefit from continuous association with users.

Also at the GSMA Mobile World Congress, where NFC was a dominant theme, handset vendors such as Nokia, Samsung, RIM and Motorola said they will ship large volumes of smartphones this year to support NFC. Apple is also rumoured to be working on an NFC-enabled iPhone.

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