By Reuben Lee and John Chan
05/10/2007
URL: http://asia.cnet.com/reviews/mobilephones/0,39050603,62033035,00.htm

Contactless technology is something most city dwellers have probably come across in some form or other. In Singapore and Hong Kong for example, taking the city subway requires the use of a card which opens a gantry by proximity. Near Field Communication (NFC) technology is a standard that will be deployed for such contactless transactions in many areas.

Feedback: Will NFC take off in Asia outside Japan? Send us your thoughts here.

In a few years, those same train commuters may no longer need their contactless cards. Mobile phones can be equipped with NFC technology so it effectively takes on the task of the existing stored-value tickets. These can even be used to pay for items at shops. No more cash, no more plastic cards, just your mobile phone. Sounds like a totally different world? No, Japan already has a well-established system that the rest of the world can only look enviously toward--but we are getting closer. Currently, Singapore operators StarHub and SingTel are conducting trials for mobile phone transactions using NFC.

When it comes to implementation, it seems that there's a difference whether information is stored in a SIM card or on the handset. In an email interview with Jerome Sion, director for mobile contactless and M-commerce at Gemalto, we learned more about what the Netherlands-based company is planning with its SIM card-based NFC technology for mobile phones and what it means to you, the end-user.

Q: Can you explain in simple terms what NFC is all about?
NFC is a short-range wireless technology that enables the communication between devices over a distance of less than 10cm.

There are three main ways to use NFC:

• Card emulation: The NFC device behaves like an existing contactless card, useful for contactless payment like Visa Paywave or MasterCard Paypass, or for transport fare payment systems.
• Reader mode: The NFC device is active and reads a passive RFID tag; for example reading and storing a Web address or coupon from a poster for interactive advertising.
• Person-to-person (P2P) mode: Two NFC devices communicate with each other exchanging information.

Its main benefits are that it is compatible with the existing contactless infrastructure for easy deployment and simplicity. NFC is characterized by a natural and intuitive "just touch" movement.

Q: Besides not having to carry around credit card or cash, what are some of the other benefits of implementing NFC technology in mobile phones?
First, the mobile phone brings a screen, a keypad and a connection which opens opportunity for value-added services such as m-banking, loyalty schemes and couponing. That way, the banks will be able to offer a comprehensive m-commerce experience and not just payment.

Second, implementing NFC technology in a mobile phone will allow service providers such as banks and transport companies to leverage on the incredible success of mobile telephony as a new channel to reach out to their customers.

Q: How are transactions conducted using the SIM-based NFC phones? What safeguards are in place to protect users when they lose their phones?
All the applications (payment, transport) and end-user credentials are stored on the SIM. The handset has an NFC chip & antenna to manage the radio frequency part, but all the critical information remains in the SIM.

In case of loss, the applications can be deactivated over-the-air.

Note that the applications can also be protected by a PIN code.

Q: If the user decides not to carry a phone, can he still use the NFC functions with just the SIM card?
No, the SIM is not meant to be removed from the mobile phone and used as a contactless card.

Q: Can the NFC technology be implemented on current phones?
No. Mobile NFC requires new mobile phones that integrate an NFC chip.

Q: What kind of services or applications can consumers expect to see using the NFC technology?
Three categories of services are possible with a SIM-based NFC solution:

• Emulation of a contactless card--we envision transport and payment as the two main opportunities as we can leverage existing infrastructures. Other applications such as ticketing, loyalty and building access will come in a second stage.
• Tag reading--accessing information & promotions with smart poster.
• Peer-to-peer--exchanging information or value with friends.

Q: Will there be any privacy issues when using NFC for transactions? For example, are the telcos able to track purchases made via NFC? What kind of information is sent and received during each transaction?
The memory of the SIM is split into several compartments that are secured with some kind of firewall (based on a technology call Global Platform) so that each service provider (the bank A, B, C, the transport company A, B, C) can have its applications hosted on the SIM in a very secure way, with the confidence that no other applications residing on the card will have access to the apps and data stored on its allocated memory space.

Telcos will not be able to track NFC transactions. There is no privacy issue; the information that is sent and received is the same for a traditional contactless card.

Q: How much control does the user have over the SIM-based NFC functions? Can it be deactivated by the user?
End-users will be able to deactivate the application (provided it is a specified function in the application).

Q: When can consumers in Asia expect to see SIM-based NFC phones being introduced and used in the market?
We expect the first volume deployments to take place by mid-2008.