NFC and the Mobile Payment Initiative-3

By Craig Conkling

[Part 3]

History of NFC Technology

In March 2004, Nokia, Philips Electronics and Sony establish the Near Field Communication (NFC) Forum^B to enable the use of touch-based interactions in consumer electronics, mobile devices, PCs, smart objects and for payment. NFC technology evolved from a combination of contactless identification (i.e. RFID – Radio Frequency IDentification) and interconnection technologies.

At the time, NFC technology was standardized in ISO-18092, ECMA 340, and ETSI TS 102 190. NFC was also compatible to the broadly established contactless smart card infrastructure based on ISO-14443A, Philips’ (now NXP) MIFARE® technology, as well as Sony’s FeliCa™ card. The reason that NFC technology has its roots in ISO-18092, ISO-14443, MIFARE and FeliCa, is that these standards and technologies were the basis for smart cards, which were first used in the 1980s and 1990s in Europe and Japan. And this technology was derived from RFID technology that was invented in 1945 by Léon Theremin as an espionage tool. The first application of the RFID technology, though, was invented in 1973 by Mario Cardullo.

The original business plan presented by Mario to investors in 1969 showed use cases for^C:

•         Transportation – automotive vehicle identification, automatic toll system, etc

•         Banking – electronic check book, electronic credit card

•         Security – personnel identification, automatic gates, surveillance

•         Medical – identification, patient history

One could say that Mario was ahead of his time, leading the way for present day applications; and many of today’s applications are included in his original business plan. The original smart card technology, called automated chip card, was invented in 1968 German rocket scientist Helmut Gröttrup and his colleague Jürgen Dethloff. The first mass use of the card was as a Télécarte for payment in French pay phones, starting in 1983. In 1992, the Carte Bleue debit cards became available in France. Customers inserted the card into the merchant's point of sale (POS) terminal, then typed the PIN before the transaction was completed. Only very limited transactions (such as paying small highway tolls) were processed without a PIN^D.

Smart-card-based "electronic purse" systems, which stored funds on the card so that readers do not need network connectivity, entered service throughout Europe in the mid-1990s. These cards could also be considered the first version of pre-paid cards, and are similar to SVC (stored value cards), which are used in their magnetic striped version in the North America today by Target, Best Buy and similar stores as gift cards^E.

With the introduction of smart-card-based Subscriber Information Module (SIM) used in GSM mobile phones in Europe in the 1990s, smart cards along with cell phones became widespread. To further smart card usage, MasterCard, Visa, and Europay agreed in 1993 to work together to develop the specifications for smart cards as either a debit or a credit card. The first version of the EMV system was released in 1994.