Good Example Of Report On Near Field Communication (NFC) Technology
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Executive Summary 3
Near Field Communication (NFC) Technology 5
Features of NFC 6
Application in e-Business 7
Key Advantages of NFC 8
Key Limitations and Risks in Implementation 8
Near Field Communication (NFC) was the result of a series of developments in short-range radio communications beginning with the Radio-Frequency Identification (RFID) technology. Although NFC was invented during the late 1900’s, it was only in recent years that this technology became mainstream in terms of its coverage and use. Since 2012, various companies including leaders in mobile computing Apple and Samsung, and telecommunications companies AT&T, T-Mobile, and Verizon, adopted NFC as part of their product and service offering. For this reason, the widespread access to NFC owing to billions of mobile phone users and subscribers is a good opportunity for businesses to engage consumers and offer services that would allow consumers to complete transactions wirelessly and conveniently using their mobile phones. Tapping into and targeting the billions of mobile phone users is the greatest advantage for businesses in using NFC as a system or service.
Essentially, NFC may be used as an electronic wallet that allow cashless and contactless payment. Furthermore, NFC also allows businesses to communicate and exchange information with customers wirelessly. Not all businesses, however, take advantage of these features. For this reason, recommendations include continued research into the features and use of NFC in e-business and adoption of this technology as a service for e-businesses. Focusing on consumer behaviour would allow businesses to determine types of consumer activity or transactions that need NFC as a means of communication. Security risks attributed to NFC use must also be addressed and resolved to ascertain the security of customer information and safety from cybercrime and threats.
Near Field Communication (NFC) is a radio communication technology that facilitates the sharing or exchange of information between two devices. Unlike other radio communication technologies such as the Global Positioning System (GPS) that operates long-range, the NFC only operates in a short range (Ortiz, 2008). As noted by Ortiz (2008), NFC is a relatively young technology despite it being invented during the late 1900’s. NFC has evolved in the 21st Century from older technologies with a similar structure such as the RFID. However, it was only in recent years that companies, particularly in the telecommunications industry, adopted NFC as part of their system and service to end users.
NFC is now being considered as one of the emerging tools in e-business since powerful large scale companies in various industries such as Sony, Samsung, Apple, IBM, Visa, AT&T, T-Mobile, and Verizon began integrating the technology into their products and services since 2012 (Fetter, Beckmann, & Gross, 2013; Shin & Lee, 2014). Since Samsung and Apple, as well as major telecommunications companies, have adopted NFC, perhaps it is high time that this technology becomes mainstream and that businesses understand how they may take advantage of short-range radio technology in their day-to-day operations.
The limited application of and research into NFC is the main reason why it makes an interesting research topic or subject. NFC’s technology has existed since the 20th Century from when it continued to evolve into a more advanced short-range technology that we know today. In recent years, mobile and telecommunication companies such as Apple and Samsung began integrating NFC technology in mobile phones. For this reason, NFC is becoming a popular technology. Nonetheless, businesses need to become aware of NFC and the ways that they may take advantage of it to maximise business opportunities. Since the application of NFC is limited, it is therefore important to explore not only its features but also its advantages and contributions to e-Business. In this way, businesses would understand how to integrate NFC in their business and engage with millions of consumers worldwide using mobile phones that utilise this technology.
Near Field Communication (NFC) Technology
NFC as a technology evolved from earlier forms of short-range radio communication such as the Radio-Frequency Identification (RFID). The RFID was invented during the 1980s. Nonetheless, RFID had limitations particularly when it comes to usability, function, and the time the technology requires to link or communicate with other devices (Lerner, 2013). Research and development continued until the NFC was created to fill in the limitations and shortcomings of RFID. Mobile phone companies such as Nokia already produced mobile phones with NFC as early as 2004. However, mobile phones have failed to maximise the features and contributions of NFC to communication (Lerner). First of all, not all mobile phones had NFCs and only a small number of businesses made use of this technology.
In 2012, however, various mobile computing and telecommunications companies saw the opportunity in utilising NFC. Large scale companies such as Apple and Samsung integrated NFC into their mobile phones following forecasts of this technology’s important role in the future of e-business (Martinez-Lopez, 2013). The widespread use and implementation of NFC made the technology one of the up and coming features or services for e-businesses and end users.
Features of NFC
The NFC follows a system of contactless communication. The NFC’s Contactless Communication API, a Java-based platform, enables the NFC to facilitate contactless communication. Contact through NFC follows a process where a device identifies communication targets, links up with the target, identifies the properties of the target, and establishes the connection by either reading, writing, or exchanging incoming or outgoing data. After the exchange, the Contactless Communication API closes the connection and ends communication (Ortiz, 2008).
NFC is mainly used as a means to perform contactless payment wherein end users or consumers pay for accumulated goods or services wirelessly. To complete transactions using NFC, two devices must have been integrated or installed with this type of technology (Ortiz, 2008). A device with NFC such as a mobile phone may only be used to communication or transact with other device if the latter also has NFC (Ortiz, 2008). Furthermore, NFC also makes various activities and transactions easier as it would be able to replace various objects such as cash, tickets or coupons, cards, and cheques (Coskun, Ok, & Ozdenizci, 2013). Using NFC-enabled devices, users may store all types of information from amount of cash in their bank accounts or credit card, tickets, and cards, and use them to make transactions.
NFC vs. Alternatives
NFC is comparable to other types of technologies that may be used in e-business such as the Radio-frequency identification (RFID), Infrared Data Association (IrDa), and Bluetooth. Early models of mobile phones had the RFID and IrDa technologies while recent models today use NFC and Bluetooth technologies. Out of the four short-range communication technologies, the NFC is the most viable tool that e-businesses may take advantage of because the set-up time is shorter, thus, allowing swift and convenient transactions. Furthermore, NFC has the shortest range, which makes the transaction more secure. Compared to the RFID, IrDa, and Bluetooth, NFC is also more user friendly and offers more features for businesses and consumers without the difficulty of adjusting configurations to set up connections. Table 1 below illustrates a comparison of the features of the NFC, RFID, IrDa, and Bluetooth.
Source: Ali, Abouhogail, Tarrad, and Youssef (based on the NFC Forum in 2004), 2014
Application in e-Business
Considering the aforementioned features of NFC, e-Businesses may use NFC to improve relationships with end users by making services and transactions more convenient for customers. Some businesses already adopt NFC as a technology to enable users to complete cashless and contactless payment. Nonetheless, NFC brings more opportunities for e-Businesses. NFC’s Contactless Communication API allows users to communicate and share information. E-Businesses may use NFC to gather information about their customers, particularly the latter’s needs (products or services), interests, and preferences. In so doing, businesses would be able to identify consumer needs and demands and customise their products and services based on the interests and preferences of their customers. Researchers also discovered that the demands of NFC from users when it comes to understanding and using the technology “allow high NFC surfers to make an informed decision, and the higher the NFC, the greater the access to product information and the motivation to think about it” (Martinez-Lopez, 2013, p. 336). Consequently, this would bring about customer loyalty due to flawless and convenient services.
Key Advantages of NFC
As formerly noted, the NFC may be used as an electronic wallet. Hence, the NFC makes transactions for consumers not only convenient but also safe since they need not bring cash with them when purchasing goods or services. Furthermore, consumers my complete transactions wirelessly and at any location using their mobile phones by accessing their phones’ NFC feature. NFC also allows users to make informed decisions when purchasing goods and services thereby giving businesses the same opportunity to introduce their products and influence consumer decision-making (Martinez-Lopez, 2013).
Key Limitations and Risks in Implementation
One of the main issues in the implementation of NFC in e-business relates to security. All companies in e-commerce are faced with security issues due to the vulnerability of cyber technology to breaches in system mainly through hacking. System breaches consequently compromise the security of customers and places them at risk for identify theft and other forms of cybercrime (Kitsos, 2009). These issues may be the foremost reasons why e-businesses and end users could be hesitant to use NFC.
Out of all existing short-range communication technologies, NFC remains to be the most viable alternative in making transactions more convenient between e-businesses and end users. The widespread integration of NFC across various mobile phone platforms (i.e. Android, iOS, etc.) makes it an alternative for e-businesses to facilitate transaction between them and customers. Contactless and cashless payment or transaction would allow e-businesses to make their services convenient and accessible. Nonetheless, e-businesses should look into other ways to take advantage of NFC as a technology. Furthermore, e-businesses need to address security risks and threats attributed to NFC.
The foregoing discussion proves that despite the advantages and features of NFC, the application of this technology is quite limited considering the scope of its use and the number of devices and businesses that rely on this system to communicate and transact with end users or consumers. One of the challenges in adopting NFC in e-business is looking for opportunities to take advantage of this technology. Businesses may be hesitant to adopt NFC but it is important for them to know that Samsung and Apple, companies with billions of users around the world, as well as telecommunication companies such as AT&T, T-mobile, and Verizon that share millions of subscribers, use NFC. E-Businesses may then take advantage of this by making NFC an option for users to communicate and complete their transactions. E-Businesses should invest in research studies to look into other ways to use NFC. Moreover, it is highly recommended that e-businesses address security risks and threats prior to implementing services for customers that make use of NFC.
An existing opportunity for e-Businesses is the capacity of NFC to facilitate communication between two people or entities with NFC-enabled devices. Some businesses already use NFC to facilitate contactless payment and users use their NFC-enabled devices to store bank account, credit card, or ticket information among others. Businesses should continue adopting these transaction systems. In the age of social media networking, however, e-businesses may use NFC to further influence consumer decision-making. Part of this involves the use of NFC to share product and service reviews among users. The system could work in a store. Once customers enter the store premises, the store’s system collects personal information (including interests and preferences) from the customers’ mobile devices. The store’s systems may then send product recommendations to customers’ devices based on their profile. In addition, customers may create product and service reviews and share them with other customers through their NFC-enabled devices. The foregoing example illustrates a system that e-businesses may use to maximise NFC as a technology and tool.
Ali, A. H., Abouhogail, R. A., Tarrad, I. F., & Youssef, M. I. (2014). Assessment and comparison of commonly used wireless technologies from mobile payment systems perspective. International Journal of Software Engineering and its Applications, 8(2), pp. 255-266.
Coskun, V., Ok, K. & Ozdenizci, B. (2013). Professional NFC application development for Android. Hoboken, NJ: John Wiley & Sons.
Fetter, M., Beckmann, C. & Gross, T. (2013). MagnetiCode: Physical mobile interaction through time-encoded magnetic identification tags. Proceedings of the 8th International Conference on Tangible, Embedded and Embodied Interaction, pp. 205-212.
Kitsos, P. (2009). Security in RFID and sensor networks. New York, NY: CRC Press.
Lerner, T. (2013). Mobile payment. New York, NY: Springer Science & Business Media.
Martinez-Lopez, F. J. (2013). Handbook of strategic e-business management. New York, NY: Springer Science & Business Media.
Ortiz, C. E. (2008). An introduction to near-field communication and the contactless communication API. Retrieved from http://www.oracle.com/technetwork/articles/javame/nfc-140183.html
Shin, S. & Lee, W. (2014). The effects of technology readiness and technology acceptance on NFC mobile payment services in Korea. Journal of Applied Business Research, 30(6), pp. 1615-1626.
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