Semiconductor company NXP today unveiled what it claims to be the world’s first industry-standard Near Field Communications (NFC) controller, a chipset that will allow handset makers and carriers to offer mobile payments based on the European Telecommunications Standard Institute (ETSI)’s latest specifications.
NFC is a short-range, high-frequency wireless communication technology that enables the exchange of data between devices over about four inches of distance. Essentially, it turns the mobile phone into a credit card. In the past, most analysts have viewed the technology as having a lot of potential, but as one of the last steps in the evolution of mobile financial services. That’s mainly because most mobile banking applications available today still mirror the online banking experience, except in emerging markets where consumers are often unbanked. Mobile ticketing deployments, similar to NFC, have been cropping up in the last year, however, but primarily for airlines, peer-to-peer transactions like StubHub and for events such as sports or concerts.
Getting true NFC, in which the phone acts as a credict card for any transaction, off the ground will depend on first getting consumers comfortable with the security, agreeing on an industry-wide standard and garnering support from all the players in the ecosystem, including carriers, handset makers and financial institutions. On the standards front, the GSMA announced its Pay-Buy-Mobile initiative last November, including plans for full NFC functionality based on the standardized Single Wire Protocol (SWP) by mid-2009. NXP anticipates that its SWP-compatible PN544 chip will kickstart this movement towards NFC adoption across the globe – including in the U.S.
The PN544 will include the capability for mobile ticketing, payments, transports and data sharing direct from the mobile phone SIM. So that the chip can work with any handset maker, it supports three different architectures for NFC, including on the circuit card, SD card or within the mobile handset. The PN544 is backwards compatible and interoperable with existing contactless infrastructure for payments and ticketing already in place across the world.
NXP said that the PN544 chip is being sampled by a number of major handset manufacturers and will be available in mass during the third quarter of the year, around the same time the first commercial NFC- enabled handsets are expected to launch, including from Nokia (NYSE: NOK). Nokia introduced the 6126 Classic, its third handset to be fully integrated with NFC last month. The SIM-based NFC phone is capable of having NFC built into it using the SIM card. It won’t be available in the U.S. this year, but consumers in Europe will be able to use the phone for secure payments and transactions by Q3.