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By Natasha Lomas, 23 December 2009 10:00

NFC eh? Does this have anything to do with the colonel and his seven secret herbs and spices?
That's KFC, you dolt. NFC (near field communications) is all about paying for stuff with a chipped mobile phone or a smartcard such as Transport for London's Oyster travelcard.

Tell me more...
NFC is a short range wireless technology that enables a device to communicate with a reader. The data transfer is two-way - meaning NFC mobiles can receive data as well as send it which is important for things like authentication and security. It also makes NFC a more flexible technology than another short range wireless tech you may have heard of: RFID.

Enough acronyms already. So say I have one of these NFC mobiles, how do I actually go about paying for something?
You simply swipe the phone over an NFC reader - just as users of the Oyster card 'touch in' and 'touch out' of stations on the London Underground. You don't actually have to make contact with the reader for the data transfer to occur - but you certainly have to get up close and personal: within a centimetre or so.

When you swipe your phone over the reader, payment is deducted for a purchase. NFC phones or smartcards can be linked to bank accounts, so money can be debited directly from a user. Alternatively, they could be stocked up in advance with credit and then used as payment on the go, meaning you don't have to carry cash around.

Sounds cool - though I've never seen anyone waving their phone around to pay for stuff like that. I have seen those 'wave and pay' card things being used in my local Pret A Manger though.
Indeed. And you'll see lots more bank and credit cards getting NFC over the next few years. At the start of 2009 Barclays announced all replacement and new debit cards would feature NFC. It estimates its entire debit card estate will be contactless by 2011. And back in the summer credit card purveyor Barclaycard said there are around two million of its contactless cards in circulation. Plus more retailers are rolling out readers so NFC cards can be used in the contactless way they were intended.

But what about phones? When am I going to get NFC in my mobile?
It's a good question. If you lived in Japan you wouldn't need to ask - as the 'osaifu keitei' (wallet phone) is already used by millions of mobile subscribers for making payments via credit cards or preloaded e-money or operator billing. It's also used for transport ticketing and more. Japan's wallet phone was launched in 2004 by operator NTT DoCoMo using Sony's contactless FeliCa chip - which itself began life as a smartcard system for electronic money and travelcards.

But, needless to say, outside of the Far East progress towards wallet phones has been much slower.

In the UK mobile operator O2 trialled NFC phones on the London Underground back in 2007 and 2008. Both Oyster travelcard functionality and contactless payments - via a Barclaycard Visa app - were trialled at that time.

However at the end of the trial the operator gave a cautious outlook on the likelihood of a commercial rollout in the UK, despite the triallists apparently being pretty happy with their NFC phones. Last year O2 said there could be a wait of up to five years for such functionality. Since then the worldwide recession has intervened too - a factor that O2 UK's CEO believes could further delay any NFC rollout.

What's stopping mobile operators rolling out the tech?
One of the major obstacles to getting NFC up and running is the need for players from various industries to work together on the system and the apps it runs. O2 has stated that all mobile operators would need to buy in to the tech before it takes off - so getting so many different interest groups and direct rivals to agree could obviously take a while.

Plus, don't forget mobile makers need to be on board in a big way as well. Outside Japan, Nokia is one of the manufacturers that has experimented with putting NFC in handsets - but if the tech is to be a success, it's going to need to be ubiquitous or near ubiquitous in handsets, much like Bluetooth is, and that's not even close to happening.

Will this technology ever get off the ground outside Japan?
I'm being downbeat about NFC's short-term prospects but there are some positive signs too - not least the number of companies who count themselves members of the NFC Forum - including LG, Microsoft, Qualcomm, Sony, Samsung and Texas Instruments to name a few.

In terms of positive signs, earlier this year chipmaker Qualcomm announced it would be putting NFC into some of its chipsets - which should give the tech a boost down the line - and mobile operator Orange announced a strategic partnership with Barclaycard for NFC which was said to include the discussion of handset roadmaps.

Meanwhile analyst house Gartner is tipping NFC as one of the mobile techs to watch over the next few years. It's expecting large-scale deployments starting from late next year, with Asia leading followed by Europe and North America.

In other NFC predictions, Ericsson's VP of systems architecture Håkan Djuphammar believes all new mobiles will have NFC by next summer. That's probably a little optimistic but let's wait and see.

Apart from travel and making payments what else could I use my future NFC phone for?
The sky's the limit really. Air France has trialled NFC-enabled mobile boarding passes, while Ericsson believes the tech could be used for smart keys to lock and unlock physical doors - so your mobile replaces your car keys perhaps.

For more on other possible applications of NFC check out this article.

silicon.com's Jo Best contributed to this report.