NFC operates in the 13.56 MHz frequency range, over a typical distance of a few centimeters. The underlying layers of NFC technology are based on ISO, ECMA, and ETSI standards. NFC technology is supported by major communication device manufacturers, semiconductor producers, network operators, information services firms, and financial services organizations. An important feature of NFC is its automatic compatibility with all forms of contactless cards and readers, even legacy media. Given that the NFC transmission range is so short, NFC-enabled transactions are inherently secure; additionally, physical proximity of the devices also reassures the consumer of maintaining control of the process (i.e. interference avoidance).
Products with built-in NFC capability dramatically simplify the way consumer devices interact with one another, helping speed connectivity to receive and share information, including fast and secure financial transactions. NFC provides intuitive and safe communication between electronic devices. NFC is both a “read” and “write” technology and by bringing two NFC devices in close proximity automatically initiates a network connection. From a technical perspective, an over-the-air (OTA) infrastructure is necessary to support NFC applications, including transaction settlement and coupon downloading. The OTA protocol involves strong security measures designed to ensure proprietary data is not exposed or vulnerable to interference or interception.
NFC-enabled devices can link contactless payment systems, connect to smart media, and access downloadable content. NFC applications, being developed and tested by Nokia, Motorola, Philips, Sony, and others are typically divided into four broad application categories.
1. Touch and Go -- Applications that require that a device equipped with access information be brought into proximity of a reader. Examples: transportation and event ticketing, security access coding, and smart label reading.
2. Touch and Confirm-- Applications such as mobile payment where the user has to confirm acceptance of a transaction and/or enter a password to verify and authorize payment.
3. Touch and Connect -- The linking of two NFC-enabled devices for peer-to-peer data transfer. Music downloads, image exchanges, and address book contents, for example.
4. Touch and Explore --NFC devices can offer multiple functionality. The user is able to explore device capabilities to select the most appropriate function or service.
The impending success of the Google Wallet is somewhat focused, and dependent, on the increasing popularity of mobile and local (MoLo) platform programming. As an m-commerce application, the Google Wallet has the capability to electronically store credit/debit account information, promotional offers, loyalty and reward points, and gift cards. During transaction settlement, discounts, promotional campaigns, and loyalty points can be automatically applied and reflected in final reconciliation. For example, a consumer might tap his/her smartphone on an NFC payment reader, thereby exchanging payment information, applying relevant discounts, and aggregating loyalty information. As mentioned earlier, a serious concern related to the Google Wallet is security. The Google Wallet is highly secure with multiple levels of authentication including a screen lock, PIN code numbers, and encrypted credit/debit information. Google Wallet merchants become "SingleTap" merchants, meaning that users can pay by just waving or tapping a compliant Google Wallet device to settle a purchase while earning loyalty rewards and redeeming e-coupons. Given affiliation with MasterCard, MC Paypass-enabled terminals as well as CitiBank MasterCard and Google Prepaid Cards also accept Google Wallet and Google Offers.