Near Field Communication Chips, Found in New Android Phones, May Replace Credit Cards

By Ed Silverstein, TMCnet Contributor

When Google CEO Eric Schmidt (News - Alert) gave a peak at Android's newest handsets during a session at the Web 2.0 Summit on Monday, he revealed that the devices would include support for technology called Near Field Communication.

Near Field Communication -- better known by its acronym, NFC -- uses a combination of hardware and software to let users essentially turn a phone into a wallet, says PCWorld. Future Android (News - Alert) phones will have NFC chips built in, Schmidt said, and the Android Gingerbread release will provide the software needed to allow them to function, according to JR Raphael of PCWorld.

Here's what users can expect.

• Google's (News - Alert) NFC Android phones will let users make contact-free payments.
• One of the primary ways NFC will be used within Android will be as a mobile payment system, Schmidt says. Thanks to the chips' short-range wireless capabilities, an NFC-enabled smartphone will allow users to wave the device in front of a retailer's sensor and have a purchase immediately placed on a credit card or banking account. It's something Schmidt refers to as a "tap and pay" method of purchasing. Its impact could be enormous, with Schmidt saying, “This could replace your credit card.”
• Google's NFC Android phone-based payments should be secure. Schmidt contends that having payment system on a phone is actually more secure than carrying it around on a piece of plastic, as it provides a greater level of authentication. And rather than imprinting account numbers on an easily readable card, an NFC-enabled device keeps it encrypted and password-protected inside the phone. "The credit card industry thinks that the loss rate is going to be much better. They're just fundamentally more secure," Schmidt says.
• Google's NFC Android phones will allow the retrieval of information.
• Google's NFC-enabled Android phones won't only be about commerce: The systems will also allow users to "check in" with sensors around a city to instantly load information onto their device.

During his demo, Schmidt tapped a phone to a specially marked Google Places placard. It immediately caused location information to pop up on his Android handset. The same principle could be used to exchange information with retailers or other smartphone users.

• Google's NFC Android phones could work as keys. A Swedish company is currently testing the use of NFC-enabled smartphones as hotel keys. As reported by PCWorld, the system lets guests "check in and receive [their] key directly onto their mobile phones" before ever setting foot in the building. Similar usages have been envisioned for ticket processing -- and all of this is likely only the tip of the iceberg.

"People don't understand how much more powerful these devices are going to be," Schmidt says.

Schmidt adds that the idea is simply too new to predict what types of applications Google and others will invent.

Other smartphone companies are taking steps toward implementing the technology, too, PCWorld reports. Nokia (News - Alert) has said it plans to have NFC-ready Symbian phones on the market by next year, and rumors have pointed to Apple developing an iPhone-based NFC implementation for some time, PCWorld adds.

Mobile carriers are getting on-board with NFC as well. AT&T, Verizon (News - Alert) Wireless, and T-Mobile announced the formation of a joint mobile commerce network, Isis, that'll be structured around NFC technology.

Ed Silverstein is a TMCnet contributor. To read more of his articles, please visit his columnist page.

Edited by Tammy Wolf

(source: http://m2m.tmcnet.com/topics/m2mevolution/articles/118318-near-field-communication-chips-found-new-android-phones.htm)

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