The “Holy Grail” of mobile devices is the ability to use the mobile phone to transact payment. On the way to that goal, manufacturers of smart phones will likely solve a number of technological issues including the use of the phone for identification and security credentials (keys!) The future is here already, now it’s just a matter of the world catching up to it. Near Field Communication (NFC), Bluetooth 4.0, Ant, Ant+, Zigbee, Zigbee (RF4CE), Nike+, IrDA are battling low power technologies that will possibly provide the “Missing Link” needed to use smartphones as a practical key and as an electronic payment system. The keyword there is “practical” because our smart phones now can provide both of those functions but with many limitations and caveats.
For example, Google’s current payment system, Google Wallet can be used for transactions…under the following conditions:
The only credit card you can use as your “digital wallet” is a Citibank MasterCard. For people who don’t use Citibank MasterCard, you must load money on Google’s prepaid card. However, Sprint is the only phone carrier who is currently supporting Google Wallet, that you must be on Sprint (or Virgin Mobile) to use the app. An exception to this is you have an unlocked version of the Nexus S, which can used on AT&T. However, there are several merchants, even in Lafayette, La that have the in store systems to take the payment including Circle K, Piggly Wiggly, Chevron, CVS pharmacy and 30 or so other merchants.
The two leading mobile phone platforms are Apple and Android, and while these giants are battling it out for market dominance another wireless war is being waged between them for wireless tech. Apple’s released it’s Iphone 5 in September of 2012 and over 2 million devices were delivered within 24 hours of it’s release date. To many tech watchers surprise, the Iphone 5 didn’t come equipped with a NFC system, instead Apple opted to incorporate Bluetooth 4.0 in it’s device. Many Android phones including Samsung, HTC, and Sony as well as Blackberry have embraced the NFC technology for quite some time although many phone users are not even aware that their phone has such a technology included.
Fred Huet, the director of Greenwich Consulting, thinks Apple’s decision to forgo implementing NFC was a mistake: “The decision to omit NFC in the iPhone 5
could cost Apple. It is just a matter of time before the smartphone replaces the plastic card, and by skipping this technology, Apple may have missed a valuable opportunity to take the lead in this market. With over 400m active credit card accounts on file, Apple had a prime opportunity to convert its customers using a sleek mobile payment system tied to the iPhone. Instead they could find that they have fallen behind closest rivals Samsung, Nokia
and indeed Motorola, all of whom introduced the technology into their devices last week.”
However, Apple has not thrown in the towel on NFC just yet, t
he U.S. Patent and Trademark Office granted Apple a patent over “techniques for triggering a process within a portable electronic device that identifies itself for purposes of establishing communications with another device that is in proximity.” Patent US 8,290,434 B2 also hints at how people could use the system to transact payments NFC type terminals. Also of note Apple has also filed a for a biometric iPhone patent
that would allow Apple users to unlock their devices with fingerprint, eye or face recognition.
Who else is not betting on NFC? Paypal, their CEO John Donahoe said during the company’s second-quarter earnings call, “When is it (NFC) going to be ready? Never,” he said. “I think other technology solutions, like what PayPal is doing where you pay hands-free with a mobile number and PIN, provide compelling consumer experiences that don’t require the actual use of an NFC technology.”
So how long before our customers will want to use their phones and employee phones to control their security systems and locks?
Well to a degree this is already happening, several manufacturers are integrating wireless controls into their security systems, including ADT’s Pulse system which integrates Alarm, HVAC, Locking and other home automation functions into their Z-wave based system. One company, Lockitron, has introduced a NFC and Bluetooth 4.0 compatible lock that fits over the thumbturn of an existing common household lock. This probably represent a very early adoption stage of development but it will not be long before more integrated systems will be marketed through various manufacturers. At a 179.00 this prototype system will likely only be used by the techiest of the tech. Another early developer UNIkey uses existing Bluetooth technlogy to control some basic locks as well.
One of the toughest challenges that has stymied developers of these protocols is security. All of the systems have some degree of encryption but as most security professionals are aware…there is always a way around a security measure. In the case of NFC several enterprising hackers has already used the NFC feature to “completely takeover the device, and download all the data from it.” One of the exploits only required the hacker to pass an RFID chip within 6cm of the phone for the hack to take. Can you imagine someone walking through a crowded airport or mall taking control of people’s mobile phones…especially if they are the ‘keys’ to their home, business and bank account!
Just like any emerging technology the question becomes which platform will become the dominant one in the market that you should learn, sell and support? Remember Betamax and VHS tapes? DVD and Blueray? This is a very tough questions right now, because many of these protocols for digital communications are in their earliest stages. One thing is for sure, quite a few people are watching the technology to see which system will rise to the top and many fortunes may be won or lost over the outcome.
Existing Technologies and Work Arounds
The map rift with Google may not be Apple’s biggest misstep with the iPhone 5. Instead, it might be the company’s decision to exclude near-field communication (NFC). Most major smart phone–makers—including Samsung, Nokia and HTC—are backing the technology for its ability to turn their devices into mobile wallets, with which users can make purchases and digitally store boarding passes and coupons. As phone-makers, retailers and credit card companies work out the feasibility of NFC as a gateway to facilitating commerce, others see the technology as opening doors—literally.
NFC-enabled smart phones can function like the badges that many people swipe en route to their offices every morning. A key difference between NFC and the radio-frequency chips embedded in employee ID badges is NFC’s two-way communication capability, making it a more versatile tool forsecurity.
Two companies are testing how NFC might improve employee access to their facilities: Good Technology, which sells mobile data security software, and Netflix, the subscription-based entertainment content provider. The California-based companies recently wrapped up several-week-long pilot programs with HID Global, a provider of ID security technology, to see whether it makes sense to replace employee building-access photo badges and key fobs with NFC-enabled smart phones. A small sample of employees received Samsung GALAXY S III handsets loaded with an app that automatically confirmed their identities at NFC-enabled security checkpoints.
NFC uses electromagnetic radio fields to allow two devices to exchange data in either direction when passed within four or five centimeters of one another. Radio-frequency identification (RFID), by comparison, works from several meters away, but information moves only unidirectionally—for example from an E-ZPass tag on a windshield to a tollbooth reader.
Although much larger and heavier than photo badges, the GALAXY phones used at Good Technology and Netflix ostensibly would provide increased security because they can be PIN-protected—if the device were lost or stolen, the average person without hacking skills would not be able to access information stored on it.
“Having an authentication credential on a phone is more secure than a badge or another physical access token because the only security I have on that is my picture,” says Michael Mahan, Good Technology’s senior vice president of special markets. “If I lose my badge, someone else could fairly easily pick it up and use it to get past security.”
As part of the test project, Mahan also equipped his own office with an NFC-enabled lock to control access when he was traveling. In addition to allowing Mahan to grant office access to specific employees remotely, he could also pull data from the NFC system that showed who had used his office, and when.
At both companies most of the employees liked the prospect of simply waving a smart phone over an NFC reader so much, they said they would be willing to load the app on their personal handsets if they could not get shiny new GALAXY phones from their employers. More than 106 million NFC-enabled Google Android phones shipped in 2011, according to research firm IHS iSuppli. NFC support can in some cases be added to a smart phone by installing an NFC-compatible SIM card or microSD card.
Although both Good and Netflix plan to extend NFC testing to additional employees, some concerns remain, including whether adding the NFC app to someone’s personal smart phone would prematurely drain the battery if the app is left on for an extended period of time. NFC is designed to use only a small amount of energy, but a smart phone with a dead battery would defeat the purpose of using the device as a security badge—or anything else.
Apple has not left its customers out in the cold when it comes to short-range communications that might someday be used for purchases or security. Instead of NFC, the company has (since the debut of its iPhone 4S in 2011) endorsed Bluetooth 4.0, which includes a low-energy version of the wireless radio technology that is a bit slower than NFC but has a much greater range (about 50 meters). The new iOS 6 mobile operating system features a new app—Passbook—designed to use Bluetooth LE (low energy) for data exchange. As with NFC, the key challenge now is getting retailers and other businesses to develop apps as well as buy readers and other equipment that can take advantage of the technology.