RFID: What Will NFC Replace?
Wednesday, January 05, 2011 - RFID Connections

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Bert Moore

Editor

Bar codes are here to stay but some other things may not be so permanent.

There has been a lot of speculation about whether RFID will some day replace bar codes. That's a bit like asking whether the invention of the airplane will some day replace the automobile (well, maybe we will have flying cars some day...but not in the foreseeable future).

But near field communications (NFC) probably will replace some things we take for granted today. So what are those things?

Magnetic Stripes

The first casualty will likely be the magnetic stripe on the back of financial transaction cards. Magnetic stripe has been the mainstay of automation for these cards for decades (before these were standardized in 1970, the raised lettering on the cards was used to make physical imprints on paper). Once NFC chips are fully deployed in all financial transaction cards, the magnetic stripe will become redundant -- but not immediately. Why? Because there is a huge entrenched base of magnetic stripe readers in automated teller machines, gasoline pumps, retail stores and other locations. But within 10-15 years, the magnetic stripe will probably be as useful as the raised lettering on the cards. Admittedly, there are still a few vendors, notably ones at special events, who use the "crunch card" feature of financial transaction cards. But as NFC becomes a standard feature in smart phones, even these vendors will find it beneficial to switch over because they'll be able to verify transactions instantly and won't have to deal with little slips of paper that are sometimes hard to read.

Magnetic stripe hotel key cards may be another casualty. There's a growing use of NFC in smart phones to serve as hotel keys. Upon check-in, a guest's smart mobile device is programmed with the room access code. This saves the hotel the expense of the magnetic stripe cards currently in use as well as the bother of having to reissue cards if data on the stripe is accidentally erased (ironically, usually because the card is kept next to a cell phone). Once all smart phones are NFC-equipped, hotels will begin switching over. One additional benefit is that the same device could be used to pay the hotel bill with credit card information stored in the phone.

Financial Transaction and Loyalty Cards

A bit further down the road (the one the flying cars still haven't replaced), cards themselves may become redundant. More and more, loyalty cards and discounts are being moved to smart phones -- although most of the coupon applications are currently bar code-based. Still, once retailers replace their magnetic stripe readers with NFC readers, cards will be redundant. Financial institutions aren't in the business of issuing cards; they're in the business of issuing credits and payments. So they will be happy to stop spending the money to issue cards. The same is true of retailers, airlines, hotels and others that issue loyalty cards. They're in the business of providing goods and services, not pieces of plastic.

Pocket Change

People don't actually like loose change. Few people bother to see if they have exact change for a purchase except when it's required for mass transit or vending (usually in 25 cent increments). Most just accumulate change and exchange it for bills when they have 25 or so pounds of it. In the U.S., there has even been talk about eliminating the one cent coin because it costs more than one cent to produce. But eliminating the one cent coin would wreak havoc with everyday purchases and sales tax. The prospect of rounding everything up or down to five cents would not win any support among retailers or customers. But as NFC in smart phones becomes ubiquitous, more and more transactions will be effected electronically. In fact, with possible restrictions on credit and debit card transactions that may require a minimum purchase (to offset transaction fees), unless you're using cash, small purchases may only be possible with smart phone debit accounts -- whether it's for the morning latte, parking meters or vending machines. And for those who use only cash because -- well, just because -- disposable cell phones could be used to store actual cash deposited then credited "anonymously" via a local ATM.

Business Cards

There have already been smart mobile devices that wirelessly exchange information and more and more business people are putting QR Codes on their cards to allow smart mobile devices to capture their contact information or web site. But it is likely that these printed codes will be replaced by apps that will allow people to exchange information -- probably in the form of a vCard stored on the smart phone -- that can be added to Microsoft® Outlook or other standard contact manager.

Memory Lapses

For those of us with less-than-perfect memories or for those occasions where you haven't seen someone in years, once you've exchanged vCard information with someone, you'll have audio or virtual reality prompts that will remind you of the person's name, company/title, where you met (first and subsequent times), birthday, spouse/children (and relevant details), hobbies, and whether or not this person is a complete bore and should be avoided at all cost. Of course, a lot of this data would come from their FaceBook pages and Google searches our smart phones would perform automatically. But the key point is, our phones would recognize each other and scroll out this information on demand.

Currency

Of course, the ultimate casualty of NFC might be currency itself. Virtually every science fiction scenario includes some form of credit chip or thumbprint for financial transactions. But before that could ever happen (maybe about the time the flying cars arrive), there would have to be much greater security built into not only smart phones themselves, but into the world-wide financial system. Imagine someone publishing a "cheat code" or hack to allow people to increase the amount of money in their debit account on their smart phone. So instead of having 2.35 [choose a currency] in your "cash" account, you simply move the decimal point a few places and end up with 2,350,000.00 in your account.

Conclusion

Nowhere in these scenarios do we see a replacement for bar codes (except, perhaps, with business cards and coupons sent to smart phones -- in other words, new applications that could be considered "transitional"). To bring it back to the original analogy, we continue to see better cars and better airplanes developed, but we're not likely to see "carplanes" any time soon. The same goes for RFID and bar codes.

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Comments on this column? E-mail me: Bert Moore, Editor

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About Bert Moore

Bert Moore is a 25+ year veteran of the Automatic Identification and Data Collection (AIDC) industry and a recognized expert on the subject.

He is the director of IDAT Consulting & Education and serves under contract as AIM's director of technical communications and media relations. In addition to writing and editing AIM's "RFID Connections" and "AIM Connections" newsletters, he serves as the recording secretary for AIM's Technical Symbology Committee (TSC) and RFID Experts Group (REG).

He is a member of the ANSI Data Identifier maintenance committee and the AIM RFID Emblem maintenance committee. He chaired the CompTIA RFID+ Certification cornerstone committee.

Moore was a 1992 recipient of the AIM USA "Industry Service Award", was selected as a charter member of the AIDC 100 organization in 1997, and is the 2010 recipient of the AIM "Excellence in Journalism" Award.