Feature Articles

Introduction to Near Field Communication (NFC) Technology

Introduction to Near Field Communication (NFC) Technology


NFC Adoption in Singapore and Beyond

Humble Beginnings - How NFC Kicked Off in Singapore

Seeing the need for industry collaboration for a successful and sustainable NFC deployment, the Infocomm Development Authority of Singapore (IDA) established a industry Roundtable which comprised of MAS, LTA, MOF and 11 other key industry players (telcos, banks and payment service providers) in 2008

In Feb 2009, IDA and the NFC Roundtable agreed to work together on the deployment of an interoperable NFC mobile payment system through a Trusted Third Party (TTP) infrastructure. The role of the TTP is to serve as a neutral party, linking the banks / payment providers, other service providers and telcos. It also reaps three benefits: 

  • consumers can access any service of their choice, and not be limited by who the telco is partnering with
  • minimizes the duplication of infrastructure to save costs
  • meets the trust requirements of all parties for secure NFC mobile services 

Nine months later in November 2009, IDA kickstarted an initiative to develop Contactless e-Purse Application (CEPAS) payment terminals in retail and other segments across Singapore. Following that, IDA also established an Over-The-Air framework and standards for deployment of CEPAS on NFC devices through a technical feasability study in April 2010.

To promote the proliferation and adoption of NFC mobile payment services, IDA issued the Deployment of Inteoperable Mobile NFC Infrastructure and Payment Services Call-For-Collaboration (CFC) from November 2010 to March 2011. 

Through the CFC, seven companies (Gemalto Pte Ltd, Citibank Singapore Ltd, DBS Bank Ltd, EZ-Link Pte Ltd, M1 Limited, SingTel Mobile Singapore Pte Ltd and StarHub Mobile Pte Ltd) were brought together in October 2011 as Asia's first interoperable nationwide deployment of NFC mobile payment system. With a total investment of S$40 million, IDA and the seven companies will deploy the TTP infrastructure and more than 10 NFC mobile payment and value-added services by 2014. Its first wave of mobile payment services using NFC technology was planned for a launch in mid 2012.

Gemalto, a company specializing in digital security, was selected to develop and operate the infrastructure. DBS, EZ-Link and Citibank will be enabling a variety of credit/debit scheme cards and stored value payment products, to be issued over-the-air through Gemalto, and stored on the secure chips of customers' NFC-enabled phones. The three telcos will introduce NFC-enabled phones into the consumer market and provide customer support. 

Due to some delays, NFC services only became live in Singapore towards the end of August 2012. Consumers will be offered a choice of multiple contact-less payment products on their NFC phones, while businesses will have the option of deploying secured mobile services. The consortium of companies also rolled out credit, pre-paid and stored-value payment services through NFC-enabled mobile phones in the weeks following the official launch.

StarHub started the ball rolling with the launch of its SmartWallet app, which is in collaboration with DBS, EZ-Link and Mastercard. The following day, M1 launched its Mobile Wallet app. Available on the day itself at all M1 shops were two NFC services, M1 NFC Prepaid MasterCard and EZ-link CEPAS. SingTel and EZ-Link Pte Ltd also made an announcement later in the day with the launch of its mPayment service.

 

NFC Adoption Outside of Singapore

Japan is still one of the leading countries that have adopted and use NFC widely. The consumer adoption rate for NFC is reported at 85% in December 2012. NFC extends to almost every part of their lives, from using the technology to track their pets' health and fitness, promoting a drink via NFC hanging straps on trains to interacting with their NFC-enabled home appliances

Malaysia launched its first commercial NFC service in April 2009. Tipped as the world's first multi-function NFC payment service, the launch was a collaboration among Maxis (the largest telco), Nokia, Maybank, Touch 'n Go (transport payment card issuer) and Visa.

The Maxis FastTap service enables consumers to use the Nokia 6122 Classic to purchase goods and services at more than 1,800 Visa PayWave merchant locations. It is also used to pay for toll, transit, parking and theme park charges at over 3,000 Touch'n Go points nationwide.

More recently, consumers in Malaysia can use their NFC phones to authenticate halal certified hotels and restaurants. The first phase of the project is to have the service in at least 60 locations in the Klang Valley, and a gradual nationwide roll out.

While the U.S is lagging behind with about 10-15% consumer adoption of NFC, the technology is gaining momentum among consumers. While car parks in Singapore are managed by electronic parking systems, drivers in Oakland,California pay for their parking by tapping their NFC phones on the NFC parking meters. 

Further momentum is attributed to the new, cloud-based version of the Google Wallet app. According to Frank T. Young, Commerce Business Development Manager of Google Wallet, usage of the Google Wallet app more than doubled in the weeks after its release on 2nd Aug. The wide partnership with over 25 national retailers and MasterCard PayPass enables U.S consumers to pay with their NFC phones at more than 200,000 retail locations.