Near field communication, or NFC, allows for simplified transactions, data exchange, and wireless connections between two devices in close proximity to each other, usually by no more than a few centimeters. It is expected to become a widely used system for making payments by smartphone in the United States. Many smartphones currently on the market already contain embedded NFC chips that can send encrypted data a short distance (“near field”) to a reader located, for instance, next to a retail cash register. Shoppers who have their credit card information stored in their NFC smartphones can pay for purchases by waving their smartphones near or tapping them on the reader, rather than bothering with the actual credit card. Co-invented by NXP Semiconductors and Sony in 2002, NFC technology is being added to a growing number of mobile handsets to enable mobile payments, as well as many other applications.

The Near Field Communication Forum (NFC Forum) formed in 2004 promotes sharing, pairing, and transactions between NFC devices and develops and certifies device compliance with NFC standards. A smartphone or tablet with an NFC chip could make a credit card payment or serve as keycard or ID card. NFC devices can read NFC tags on a museum or retail display to get more information or an audio or video presentation. NFC can share a contact, photo, song, application, or video or pair Bluetooth devices.

The 140 NFC Forum members include LG, Nokia, Huawei, HTC, Motorola, NEC, RIM, Samsung, Sony Ericsson, Toshiba, AT&T,Sprint, Rogers, SK, Google, Microsoft, PayPal, Visa, Mastercard, American Express, Intel, TI, Qualcomm, and NXP.

Uses

Emerging NFC standards allow customers to quickly purchase products and transfer secure information by touching devices. NFC allows companies to reduce staffing, printing, and point of sale costs. Globally, 100 million people use mobile payment outside the U.S., but only 3.5 million use the technology in the U.S.

Social networking

NFC simplifies and expands social networking options:

• File Sharing: Tap one NFC device to another to instantly share a contact, photo, song, application, video, or website link.
• Electronic business card: Tap one NFC device to another to instantly share electronic business cards or resumes.
• Electronic money: To pay a friend, you could tap the devices and enter the amount of the payment.
• Mobile gaming: Tap one NFC device to another to enter a multiplayer game.
• Friend-to-friend: You could touch NFC devices together to Facebook friend each other or share a resume or to “check-in” at a location.

Bluetooth and WiFi Connections

NFC can be used to initiate higher speed wireless connections for expanded content sharing.

• Bluetooth: Instant Bluetooth Pairing can save searching, waiting, and entering codes. Touch the NFC devices together for instant pairing.
• WiFi: Instant WiFi Configuration can configure a device to a WiFi network automatically. Tap an NFC device to an NFC enabled router.

eCommerce

NFC expands eCommerce opportunities, increases transaction speed and accuracy, while reducing staffing requirements. A Personal identification number (PIN) is usually only requried for payments over $100 (in Australia) and £15 (in UK).

• Mobile payment: An NFC device may make a payment like a credit card by touching a payment terminal at checkout or a vending machine when a PIN is entered.
• PayPal: PayPal may start a commercial NFC service in the second half of 2011.
• Google Wallet is an Android app that stores virtual versions of your credit cards for use at checkout when a PIN is used.
• Ticketing: Tap an NFC device to purchase rail, metro, airline, movie, concert, or event tickets. A PIN is required.
• Boarding pass: A NFC device may act as a boarding pass, reducing check-in delays and staffing requirements.
• Point of Sale: Tap an SmartPoster tag to see information, listen to an audio clip, watch a video, or see a movie trailer.
• Coupons: Tapping an NFC tag on a retail display or SmartPoster may give the user a coupon for the product.
• Tour guide: Tap a passive NFC tag for information or an audio or video presentation at a museum, monument, or retail display (much like a QR Code).

Identity documents

NFC’s short range helps keep encrypted identity documents private.

• ID card: An NFC enabled device can also act as an encrypted student, employee, or personal ID card or medical ID card.
• Keycard: An NFC enabled device may serve as car, house, and office keys.
• Rental Car and hotel keys: NFC rental car or hotel room keys may allow fast VIP check-in and reduce staffing requirements.

And many more applications !!!

Source: http://en.wikipedia.org/wiki/Near_field_communication