2012: The Year of NFC Hype

[Former Member]

The NFC hype has been building up for a couple of years now, and all the pieces are finally starting to come together. I think this is the year we’ll see some true NFC successes: more handsets, real-world deployments, merchants signing up. Widespread distribution is at least another year or two off, but things are definitely heating up.

So far, the biggest stumbling block for NFC has been the lack of enabled devices in the hands of consumers. However, South Korean telcos have reported that they’ve sold more than five million NFC devices, according to a recent article in NFC Times, including the Samsung Galaxy S II, Pantech Vega Racer and LG Optimus NFC phones, plus the Galaxy Note phone/tablet hybrid. The country’s consumers have also bought NFC-enabled attachments for their iPhones. What’s more, tens of thousands of Koreans are already using NFC to buy transit tickets on a regular basis.

Beyond South Korea, Google Wallet (partnering with Citi MasterCard and its paypass system) has already rolled out pilot programs in San Francisco and New York City. Isis is set to launch its pilots in Salt Lake City and Austin in the first half of this year. At the recent Consumer Electronics Show in Las Vegas, Visa announced partnerships with Samsung, LG and Research in Motion that will enable more phones to work with its contactless PayWave technology.

Singapore will likely launch a nationwide NFC-based mobile payments system this year. The country’s Infocomm Development Authority (IDA) awarded a contract to develop an interoperable NFC infrastructure late last year to a consortium of companies that includes Citibank and DBS Bank; operators M1, SingTel and StarHub; payment service provider EZ-Link; and digital security provider Gemalto. IDA is also encouraging other companies to use the new NFC infrastructure to roll out their own NFC services.

Spanish bank La Caixa has been busy working to turn Barcelona into an NFC city, installing thousands of point-of-sale terminals at retail and hundreds of contactless ATMs this year. I’m anxious to experience it myself during Mobile World Congress this week, when mobile industry leaders from all over the world will descend on the city. I expect we’ll be hearing a lot about NFC all week.

Additionally, Hewlett-Packard unveiled its NFC-enabled Envy 14 Spectre Ultrabook in January—a new category of thin, light laptops heavily backed by Intel. I’m not sure consumers will be lining up to tap their laptops on payment terminals, but like I said, NFC is appearing in more and more places. The pieces are starting to come together, and there’s plenty of momentum on all fronts to keep moving toward a contactless payment future.

All the same, I don’t think NFC is going to completely take over like some pundits are predicting—at least not in the next few years. In some markets, it will coexist with existing payment systems. In others, NFC will stand alone. But I think that what we see this year will decide NFC’s future.