It was ten years ago that Hans Snook, the then CEO of mobile operator Orange, was heard saying your mobile will become your “mobile for life”. Now, we are reaching the point where his vision is becoming reality, and it is Near Field Communications (NFC) that is enabling this.

NFC is a short-range, high-frequency, wireless communication technology, which enables the exchange of data between devices that are up to five inches away. It is mainly associated with mobile phones and can, in this case, work in three ways.

1. Card emulation – it can act as an existing contactless card, such as an Oyster card, a travel ticket, or even a debit or credit card.
2. Peer-to-peer mode – two devices can communicate, exchanging information, such as photos. This is similar to Bluetooth pairing, but is much faster and easier. 
3. Reader mode – it can read a passive Radio Frequency Identification (RFID) tag, such as a tag on a poster at a railway station, to enable a timetable to be downloaded.

There are many more applications, such as electronic keys, identity documents, electronic money and remote healthcare applications, to name a few. However the most exciting and transformational of these is the ‘mobile wallet’, meaning there is no reason to carry any money, debit or credit cards. Hence, Visa has made a large investment in Monitise, the UK-listed global leader in mobile money solutions.

Going forward, leather wallet and purse manufacturers may be better off focusing on selling leather cases for mobile phones! But they needn’t worry just yet, as it will take several more years before the technology is fully operational and pervasive.

NFC is expected to generate £110 billion transactional revenues by 2014, according to Juniper Networks. Just this week, Nokia announced that it was preparing to activate NFC that is already built into its C7 handset in 2011. Google also announced that NFC software will be included in the next update of it’s smartphone operating system, Android 2.3, although many current Android-operating handsets will not have the hardware to use the technology.

Given this and the possibilities of the technology, why has it taken so long to develop, especially since the technology has been around since World War II, when it started off as part of a military project? There are a number of reasons:

• Infrastructure – to work, there needs to be an infrastructure of compatible devices, readers, and yet more bandwidth. Mobile handset manufacturers must start shipping handsets with NFC technology – Nokia has already committed to this.
• Cost – someone has to pay for the infrastructure – who pays for the reader or device in a small shop, for example? 
• The business model – because there are so many stakeholders in the value chain, business models need to be established and revenue splits agreed. The mobile operators, of course, see this as a way of generating revenue for value-added services. Who owns the customer will be an interesting discussion.
• Data security and privacy – with the arrival of the mobile wallet comes huge security concerns. Only when customers know their data is secure will they adopt the mobile wallet. This will be the show stopper given that even today, there are still many people who are unwilling to use internet banking.

At Kingston Smith, we assist many clients with their data management and security concerns. Whether you are a small business or a large multinational, responsible for your own data or that of third parties, we can help you. Please contact Richard Heap on 020 7306 5653 or Mark Child on 020 7566 3731.