Your wallet is history
04 Sep 2012
How you'll soon be paying for everything with your NFC mobile...
In case you missed it, we already explained exactly what NFC is, and some of the reasons why it's the hottest new tech in mobile devices. One of the biggest benefits of NFC technology is contactless payment, which has already appeared in some UK stores and is set to take the nation by storm in the next few years. This is where you use your trusty smartphone to pay for goods or services by swiping it over a special pad – just like tapping your Oyster card against a barrier to open it up.
Pay as you go
Juniper Research recently predicted that NFC retail payments will exceed $180bn globally by 2017. That’s a mighty impressive chunk of change, and a seven-fold increase on estimated totals for 2012. Most of these transactions (around 90%) are expected to take place within the US, Western Europe and the Far East, as NFC payments become the standard. Many mobile network operators have already committed to contactless payments, while the phone manufacturers themselves have been producing NFC handsets for months now (see our boxout on page 56 for a full list of the biggest NFC-enabled phones you can bag right now). Almost every manufacturer has either already released an NFC phone, or is planning to later this year – we’re still waiting to see if the iPhone 5 will support the technology, but there’ll be some serious eyebrow-raising if it doesn’t.
Of course, retailers themselves are proving a little harder to win over, not surprising considering the significant cost of converting to Chip and PIN. Most high street stores will be sitting back to see what happens before committing another massive chunk of change, but despite this, Juniper reckons that one in four mobile phone users will pay for their shopping with NFC by 2017. We’re already seeing some popular retailers adopting the technology: chains such as Pret A Manger, Nando’s and McDonald’s have installed NFC tech in some UK branches, while Starbucks signed a deal to use the ‘Pay With Square’ mobile payment app in over 7,000 US stores.
What’s in it for me?
The advantages to consumers are clear, as Juniper’s research director, Windsor Holden, points out: ‘The major benefits of contactless payment are speed and convenience. You simply tap and pay by phone or card, thereby dramatically reducing transaction times.’ And if you can pay using your trusty mobile, that means your wallet can sit at home, collecting dust. This is especially true when you consider that apps and other phone features are replacing the likes of loyalty cards and ID, other major wallet-cloggers.
Of course, it’s great that NFC could save us hanging around in tedious supermarket queues, but we can’t forget one of the biggest concerns over cashless payments: security. Remove the need to sign a docket or enter a PIN number, and surely it’s possible for anyone to nick your mobile and use it to empty your bank account?
Crime doesn’t pay
Well, it may not be that simple for thieves, as Holden points out. ‘If someone steals your credit card, the thief could read that card and subsequently use that information [to steal money from your account]. If your smartphone is stolen, then provided that it’s password protected, the thief may find it extremely difficult to access any information stored on the device.’ Since all smartphones come with security options these days, including PIN locks and even facial recognition technology, a crook can’t simply nab your phone and get access to everything. Even if they reset your phone to wipe the security measures, your account details will also be erased. Perhaps a timely reminder to set up that password to unlock your phone, something that’s all too easy to forget until it’s too late...
If the worst happens and your mobile is lost or stolen and you haven’t enabled password protection, it doesn’t mean your account details are compromised. ‘There are security options available allowing such data to be remotely “wiped” if the device is stolen,’ adds Holden. All you need is access to the internet, and in a few short steps you can obliterate your private details from the missing handset. There are other security features built into NFC payment apps too, such as payment limits (currently £20). Also, instead of taking money directly from your bank account, some apps make you transfer funds to a holding account (similar to a PayPal account), which is then used for your contactless payments. In this way, you can have as little or as much money available, while the rest is safe and secure in your bank.
So it seems that having your phone stolen won’t be any more dangerous than losing your bank card, but what about more hi-tech thievery? When Bluetooth first became popular, there was a lot of concern over how technically-minded crooks could access your mobile and have a gander at all of your private messages, photos and more. NFC is a similar technology, allowing two devices to communicate over a short range, so will these concerns resurface? We once again turned to Mr Holden for his opinion.
‘There are certainly concerns as to how NFC can be exploited,’ he told us. ‘The security company McAfee recently pointed out how “fuzzing the hardware” (feeding corrupt data to an app to find any vulnerabilities) might be used on NFC phones and readers. Certainly, it’s conceivable that if a consumer had NFC switched on, then a would-be thief in the vicinity could collect payment information. Likewise, a few months ago a German software developer created an app that was capable of using NFC to skim card numbers and transaction/merchant details. However, it’s worth observing that NFC payments use the same payments networks, encryption, protection and security protocols as credit cards and have extra layers of security provided by the wallet application.’
Thankfully NFC is also very short-range, especially compared to the likes of Bluetooth, which is detectable up to 50m from a Bluetooth-enabled device. By comparison, NFC only reaches a few centimetres, meaning a thief would have to be practically hugging you in order to access your phone and steal your bank details. It’s also possible to turn off NFC at any time, so you could simply flick it on when making a payment and leave it switched off the rest of the time.
NFC payments tried and tested
We took to the streets of London and tried to buy ourselves snacks, booze and more, using just our trusted mobile. See how we got on....
Editor: Chris Barraclough