2012 Will Be The Year NFC Breaks Big—Just Not In The U.S.

Thanks to companies like Tagstand—and several government-backed efforts—a wave of NFC technology will break over much of the world next year. When will the U.S. catch up?

nfc111

There's been much said about the future of near field communications technology (NFC) and how it may revolutionize payment technology and the ways we interact with our environment. But if you draw together threads from several pieces of news, along with insight from players in the game, you will likely conclude that 2012 will be the year that NFC breaks big. Well, everywhere other than the U.S., at least. Why is that?

Tagstand is a newish company, partly funded by Paul Graham's Y Combinator investment, that was set up to exploit different aspects of the boom in NFC. The company's website notes: "We noticed one huge problem: buying NFC tags on the Internet is complicated. So we made it easy; we now sell NFC stickers and help you use them." Having established a foothold in the market, Tagstand then expanded its offering based on requests from customers asking for "some basic features—features we've aggregated into a platform called Tagstand Manager."

Tagstand cofounder Kulveer Taggar tells us that, "The hunch was right—there were a lot of people that wanted something like Tagstand. I remember when we first launched the store, we'd get like an order a day and then there'd be a day here or there where there'd be no orders. Then we'd get really excited at a consecutive streak and now we get multiple orders per day for hundreds of dollars' worth of NFC tags at a time. We can barely keep up with it. In the space of four or five months we've seen the environment change."

Then customers started to ask if Tagstand could program the tags to make them easier to use, which lead to Tagstand Manager—which works a lot like a QR code system does: Scanning the tag takes the user to a custom shortened URL, which then links to the intended content or service (programmable by the customer via a web interface). In this regard, Tagstand is an end-to-end NFC service company.

"The big order we got," Taggar says, "was basically in India. It was funny—we never really knew who the client was. But then we worked out that it was Nokia. Nokia in India are pushing their NFC brands heavily, they're trying to gain marketshare in smartphones, and notably they still dominate—especially in low-end markets—in India. They hired the biggest Indian movie star, Shah Rukh Khan, he's a brand ambassador and he did this little press conference where he was demoing NFC and I was shocked: He's educating the Indian population about what this tech is."

Taggar continues: "[Nokia was] working with an Indian company that then reached out to us. We power NFC displays in their priority partner retail stores. It's the largest NFC tag deployment in the world: There's 20,000 micro-locations, in tens of cities and hundreds of stores all across the country."

Under the advice of YC, Tagstand is in the middle of an exploratory trip to see how NFC tech is being exploited in the East, how it could be expanded upon and how lessons learned could then be applied in the U.S.

"In Singapore," Taggar explains, as an example, "the government is pumping $40 million into introducing NFC across the country and they've got the three biggest telco companies, Citibank, a local bank, the transit people and they've got a consortium together. They're co-ordinating, and by the middle of next year—with a goal of June 2012—they'll have NFC payments. That opens up a whole outdoor advertising realm."

And that's where Tagstand enters the scene (most recently with an ad partnership in Australia). Taggar also cited the government-sanctioned Octopus NFC transit card in Hong Kong as an exemplary use: "I went to some restaurants, and I couldn't pay with my credit card and I could pay with my Octopus card." According to Taggar, Delhi in India has its new metro system powered by NFC tickets "with a million passengers a day using NFC cards. And of course, credit card penetration in India isn't that big. So now I'm thinking these card readers are cheap to put out, and there's an opportunity for people to replace the need for cash—at least for small purchases—using this transit card."

Ans yet, the U.S. remains slow to embrace the technology. "We haven't seen that much in the U.S. I'd say 30% U.S., 70% international," Taggar notes of his company's reach. Early use cases here are tending to be advertising-centric, with users touching their smartphone to posters and so on to gain offers or access to more information—a "mix between loyalty retail and coupons."

This last aspect is interesting in light of other news this week—some of which suggests that the U.S. may be coming late to the party. Yesterday Verifone, one of the biggest U.S. makers of point-of-sale card readers, spent $1 billion ($820 million in cash, the rest covering debt) to acquire Point—a European giant in e-payments, the largest provider of payment and gateway technology for merchants in the region, handling 10 million transactions per day. The purchase is intended to expand Points services in Europe and then beyond, with the goal of including the "evolving alternative and mobile payment methods being offered by Google, PayPal, Groupon, Isis, Visa, MasterCard and American Express." Though this doesn't exclude the U.S., it does make it seem like Verifone is moving faster to embrace this technology overseas.

Simultaneously Intel has announced a plan to work with MasterCard to put NFC tap-to-pay technology into its upcoming UltraBooks computers (the PC answer to Apple's MacBook Air line)—with an emphasis on ease of transaction and a level of physical security that it's otherwise hard to reach using an online payment. That's a pan-global move, of course...because Intel doesn't make computers itself, and this again highlights other nations other than the U.S. 

Meanwhile France-based firm Inside Secure has announced its new technology, an NFC "authenticity" tag that's designed to be concealed permanently or semi-permanently inside any good that a merchant wishes to prove is an authentic product, rather than a counterfeit: The idea is that prospective buyers of items from a bottle of wine to a pair of shoes could scan them with an NFC-equipped smartphone and check the tag ID. They're tamper-resistant, and can also be used as proximity alert systems so that buyers walking nearby could be alerted to potential savings. 

Smartphone maker Acer has recently revealed a new Android handset, the Liquid Express, that has built-in NFC technology (to rival some high-end Android units like the Nexus S range) and it'll be launching in France first. Acer's also committed to building NFC into all its future handsets. And as NFC World reports, combined QR and NFC-tagged "For Sale" signs have, for the first time, just been rolled out in the U.K. via real estate agent chain Strut and Parker so that the public can instantly gain extra information about a property for sale—and so that the agency can gather rich data about who's accessing its mobile info sites.

While Google is making efforts to launch its Wallet in the U.S. it's hard not to see the sum of all this news pointing to a more rapid international adoption of NFC technology than is happening in America. As Tagstand's Taggar noted "I think 2012 is when it's all going to kick off, in terms of there being enough NFC phones in the market," and he has "a healthy level of skepticism that this is going to take off in the U.S." Meanwhile "in emerging markets phones are used differently and for different things—pushing the envelope much more than happens in the U.S." At this moment, we're inclined to agree.

[Image: Flickr user whatleydude]

Chat about this news with Kit Eaton on Twitter and Fast Company too.

Add New Comment

0 Comments