NB: This is a guest article by Stephen Vanderpool, a writer and blogger at NerdWallet.
As of late, Google Wallet and Near Field Communications have taken a lot of flak from cynics, naysayers and glass-half-empty types.
Don’t be dismayed by the Debbie Downer skeptics - NFC will soon be integrated into nearly facet of personal finance and revolutionize the landscape of travel consumerism as we know it. It won’t happen over night, but it’s not too far off, either.
Getting started
NFC has quickly become a widely covered topic on tech blogs, finance sites and news sources across the web, so we won’t spend too much time on the basics.
For those of you who need a refresher, NFC - or Near Field Communication - is a technology that enables wireless monetary transactions and data transfers between two devices. Though its potential capabilities border infinity, right now everyone is obsessed with NFC as a form of contact-less payment.
The release of Google Wallet heralds a new age of consumer spending. Currently, the primary goal of NFC seems to be ridding the world of plastic credit cards, stacks of loyalty cards and paper coupons. Google Wallet allows users to put credit card information on their mobile devices.
A simple wave of the phone pays for your purchase. Google Wallet’s SingleTap feature allows for the seamless transfer of coupons, loyalty cards and payment information in one simple tap.
Phones and fares
What does NFC mean for travel? A lot. The New Jersey transit system just partnered with Google Wallet to allow commuters to pay fares with phones. So far, sensors have been installed in Penn Station ticket machines, the Newark Liberty International Airport rail station and select buses.
Google hopes to use public transportation as a launching point for NFC payment. As commuters grow accustomed to paying for transport with their phones, they will (theoretically) become more comfortable with making other general purchases using NFC-enabled mobile devices.
The application for NFC in airports might not be as self-evident. Because passengers purchase tickets long before their actual departure, NFC doesn’t make much sense as a ticket-buying tool.
However, NFC will provide new methods for passenger and baggage check-ins, security checks, lounge access, boarding procedure, on-flight purchases and post-flight transportation. It will also be interesting to see how NFC will function in conjunction with airline credit cards and frequent flyer rewards programs.
The following hypotheses are largely drawn from a document released by the GSM Association and IATA.
NFC in airports
For starters, NFC will bring about the extinction of the boarding pass. Using self-service check-in channels, passengers will receive boarding tokens over the air, which will store boarding pass data on their mobile devices.
Rather than keeping track of a physical boarding pass, passengers will bring their phones to touch points along the way.
NFC should reduce baggage check-in time as well. Passengers will be able to identify themselves quickly using their NFC devices, making for quick tag printing and drop off. Additional baggage fees will be electronically charged and made payable by NFC mobiles.
NFC will help streamline the process of determining eligibility for security Fast Tracks. Passengers can swipe their devices at security checkpoints and be automatically directed to the proper line. Similarly, NFC will help regulate access to airport lounges.
Both lounge and Fast Track access may be purchasable through NFC transactions. And when it comes time to board, passengers need only present their phone near the boarding gate reader rather than fumbling around with bar codes and variable technology.
During the actual flight, passengers will be able to make purchases using nothing but their phones. Upon landing, NFC will simplify the process of arranging transportation away from the airport.
NFC will allow passengers to add ground transportation options when booking flights. The tickets will be sent to their devices and make the transition from air to ground seamless.
How close are we?
Google Wallet has received mixed reviews since its release. Most of the negative reviews revolve around the technology’s present limitations. Phone options are slim, and the only functional payment options are Citi MasterCards and the Google prepaid debit card.
On top of that, many merchants do not yet possess the means of accepting payment through NFC. Everyone seems to agree: Getting that infrastructure in place - equipping merchants with the proper technology - is the biggest gap to bridge.
David Holmes, vice president of NFC Solutions at Identive Group, says:
"Nothing will drive contactless infrastructure like mobile phones."
An authority on NFC technology, he believes NFC will near universal acceptance within the decade. By the end of 2011, 12 new NFC-enabled phones should hit the market.
Despite complaints about Google Wallet’s severe limitations, NFC is building momentum. Technology spreads fast, but we can’t expect instant universality. Have a little patience. The definition of "phone" is expanding every day, and pretty soon it will come to include contact-less payment device.
NB: This is a guest article by Stephen Vanderpool, a writer and blogger at NerdWallet.