January 10th, 2018
Infrastructure or Complementary Technologies Needed to Use Near Field Communications Technology
The realization of NFC potential requires partnerships between various entities to enable transactions such as payments to progress via such technology. For payments, for instance, mobile network operators, operating system providers and financial institutions will need to collaborate to ensure safe transfer of electronic money through the technology’s platforms.
In terms of technology, NFC use will only become evident where appropriate applications to link the communicating devices to supporting infrastructure are available (Pesonen & Horster, 2012; Tinari,2012). Additionally, such use of NFC will only become beneficial where maintenance of tags is carried out on a periodic basis to ensure that the information provided through the systems is up-to-date (Pesonen & Horster, 2012).
Key Vendors of NFC, Their Solutions, and Cost
Existing payment companies such as PayPal and ISIS have just joined the NFC technology (Knibbs, 2012). The value added by all the companies is almost the same since customers do not seem to have a brand preference (Knibbs, 2012). However, PayPal has an advantage due to its well-established Internet-based payment system and global presence (Tinari, 2012). PayPal has also tried to create a digital wallet with an NFC system that works with retailers’ existing POS systems and on devices that consumers already own (Tinari, 2012). The key factor in mobile payments is providing services that come from a trusted and accessible brand, a factor that favors Paypal.
Risks or Challenges in Implementing this Technology
One challenge is low-end expectations: Norton (2006) mentioned that the key to the success of NFC is to create disruptive innovation that targets low-end consumers. Because the value added by all the companies is almost the same to the customers in the NFC industry, mobile payment providers need to gain competitive advantage through “cost advantages” (Porter, 1979). They should apply a relatively low-financial value application with a low risk of fraud that does not require a large investment in a new market segment (Norton, 2006).
Another challenge is security. Because NFC systems use wireless communication, eavesdropping is a real risk. When two devices communicate via NFC, an attacker in close proximity can receive the transmitted signals (Pesonen & Horster, 2012). Such attackers can also cause data corruption, data modification, and data insertion so that, for example, the receiver is unable to understand the data sent by a device (Semiconductors. 2012). To defend against such an occurrence, NFC devices need to implement multi-layer cryptographic protocols to ensure an optimal and safe channel (Magini, 2011). Another challenge, identified by some studies is that use of mobile phones, to read or type information becomes difficult when one is near a NFC communication field (Pesonen & Horster, 2012).
Go to part five here.