NFC: The New Future Currency?

Keys. Wallet. Phone. These are the three things every average person living in the 21st century reminds themselves to carry before stepping out of the house, as they are essential to living life today. The letters ‘NFC’ may change those three essential items down to two if the mobile industry has its way.

With each yearly iteration in the smart phone mobile wars, specs and tech jargon are bandied about toting the latest killer app/must-have feature you need in your life; NFC is poised to finally be worthy of the pre-game hype. NFC (Near Field Communication) is the latest the topic in the ever-converging mobile/tech/social world we live in today and its capabilities are truly monumental.

NFC chips in smart phones enable users to communicate with other NFC-enabled smart phones and devices utilizing Radio-frequency identification (RFID) allowing for two-way communication. The devices need to be in close proximity with one another or touching in order to establish a connection.

The early adopters in the NFC movement in the United States starts with Google Wallet and Isis. Google Wallet allows customers to store their credit card information in a virtual wallet and conduct transactions at terminals that accept Mastercard PayPass transactions. Isis is a joint effort between AT&T, T-Mobile, and Verizon Wireless focused on mobile payments. Isis plans to store credit card information in addition to debit cards, loyalty cards, reward cards, discount coupons, payment coupons, tickets, transit passes and more. In 2011, the three partnered telcoms announced plans to invest more than $100 million dollars into the project.

Worldwide mobile payment transactions will surpass $171.5 billion in 2012, up 62% from $106 million last year, according to a Gartner estimate. The number of mobile payment users will reach 212 million, up from 160 in 2011.

Looking further out, global mobile transaction volume is projected to grow 42% annually between 2011 and 2016, leading to a market worth $617 billion and 448 million users in four years.

A series of hurdles line the path to full NFC adoption. Security and privacy are the main concerns, especially with technology that accesses bank accounts and credit cards. There’s sure to be a slow adoption rate to the service as well, despite NFC being available globally for several years now, plus the customary knowledge gap that comes with the adoption of new technology.

It’s too soon to forecast when NFC will become ubiquitous in smart phones, but it’s inevitable. Companies across the board are looking at every possible way to monetize mobile and the easiest way is to adopt a new standard by which consumers willfully conduct transactions via their phones. The revenue streams begin with transaction fees and percentages from purchases and extend to the mobile advertising opportunities that are primed to be explored.

As cell phones become more and more essential to day-to-day living, we are soon looking at a time where we can leave our wallets, cash, and credit cards at home. And once that happens, the question becomes how soon before we can leave our keys there as well.

Sources: MediaPost.com, CreamGlobal.com, Googl

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