Cheat Sheet: NFC and contactless payments

NFC eh? Does this have anything to do with the colonel and his seven secret herbs and spices?
That's KFC, you dolt. NFC (near field communications) is all about paying for stuff with your mobile, among other applications.

Right you are then. So this is all about sending texts off to pay for ringtones?
For heaven's sake, no, not text payments - payments using your mobile phone. Think of your Oyster card and the way you swipe it over a reader to pay for your fare.

Oh yes – so this is like doing that with your mobile then?
Precisely. NFC is a short range wireless technology, very similar to RFID and reminiscent of Bluetooth, commonly used for contactless payments.

When an NFC device - such as a smartcard like the Oyster or a mobile phone - is passed within a centimetre of the reader, data is transmitted between the two.

Most often that sort of data transfer takes the form of payment – by swiping the phone over a reader, payment can be deducted for a purchase. NFC phones can be linked to bank accounts, so money can be debited directly from a user. Alternatively, NFC cards or phones can be stocked up in advance with credit and then used as payment.

While typically most users of this sort of technology carry it in the form of a smart card for public transport, various companies are getting mighty excited about integrating it into phones. After all, most people in Europe and the US carry their phone every day, whether they have cash on them or not, and so present a wealth of opportunity for NFC.

Are all the phone makers up for this NFC malarkey?
It would seem so - as most of the familiar names in the handset world are members of the NFC Forum. Three manufacturers are the front-runners when it comes to getting NFC off the drawing board and into our pockets: Samsung has committed to the tech and has prototypes in the offing; Nokia has produced an NFC shell for one model of phone; and Motorola has previously said it's working with MasterCard on a credit card-mobile hybrid.

Can I get one of these phones now? They sound top.
Er, no, not in Europe. They are, like manga comics and Hello Kitty, big in Japan. Sony has been leading the NFC charge in the land of the rising sun with its near field communications technology, FeliCa.

FeliCa has been taken up big style by the likes of NTT DoCoMo, the largest mobile operator in Japan. DoCoMo sells 'osaifu keitei' or wallet phones, with NFC functionality embedded. Around ten million of the devices had been shipped and 100 million NFC chips have been shipped around the country, most on smart cards. Anyone with a 'wallet phone' can use it as a credit card after the operator launched its own card brand last year.

The US is also flexing its muscles in NFC but has so far headed down the NFC-enabled credit card route rather than putting its efforts into mobiles. MasterCard is one of the foremost companies rolling it out, with merchants including convenience stores, burger restaurants and petrol stations.

So what's the score in Europe?
NFC is gaining momentum in Europe too, albeit at a slower pace. Philips is one of the main proponents over here and is predicting the technology will start making its way onto phones in around 2007 or 2008.

Philips is experimenting with the technology in the French city of Caen, where NFC is being given a run out on a whole host of applications beyond mobile payments. Participants in the trial are able to use their phones to get information on tourist sites around the town and bus times from NFC-enabled stops, and to download movie trailers from an NFC-equipped cinema poster and more.

But the mobile NFC trial is still in its infancy and for the most part, the UK will only be familiar with near field communications through the Oyster card. However, even Transport for London is waking up to NFC and plans to expand the remit of the Oyster to let Londoners use the card to pay for goods and services.