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Phones become electronic wallets

Lamont Wood | March 26, 2012
In a recent pilot project, about 30 regular guests at a Clarion Hotel in Stockholm were given smartphones enabled with Near Field Communication technology, enabling them to bypass the check-in counter and access their rooms by tapping their phones on an NFC reader, which replaced the typical card-swipe door lock.

On the other side of the coin, the technology raises the possibility of being locked out due to a dead cell phone battery. "The phones themselves are typically implemented with the ability to do card emulation if the battery is dead," explains Steve McRae, CEO of Merchant360, an NFC integrator in Medford, Ore. Such cards, and key fobs that work the same way, are passive NFC devices that are powered by the radio frequency emissions of the reader. "It is not an NFC technical requirement, but it is a best practice and all the phones are supporting it."

Holmes at the Identive Group notes that the fallback feature was insisted on by various transit authorities around the world that calculate fares when the rider disembarks. Otherwise, in a scenario where NFC smartphones end up being used for transit payment systems, a dead battery could leave someone trapped on a subway.

But Chris Corum, editor or in Tallahassee, Fla., notes that such card emulation would involve only minimal functionality, and would rule out the multi-factor security that smartphones otherwise make possible. (Single-factor security, of course, is the presence of the phone; two-factor security adds a PIN, and three-factor would add a biometric feature. Sources also predict the use of a phone's GPS feature, to ascertain its location.)

Meanwhile, as it turns out, the lack of NFC phones is not a barrier to the use of NFC security systems, since some phones can be readily retrofitted.

Amitaabh Malhotra, COO at DeviceFidelity in Richardson, Texas, says his firm offers microSD cards to add NFC functionality to certain smartphones using their memory expansion microSD slots. The cards include expansion RAM so the user does not have to give up expanded memory in exchange for NFC functions, Malhotra says. The NFC antenna is included in the card and nothing shows on the outside of the phone. The card's circuitry includes a firewalled, tamper-resistant secure element which can only be read through the card's microcontroller, using the DeviceFidelity API, Malhotra explains. Any other form of access will only read the expansion RAM, he adds.

Cards for various Samsung models sell for $29.95, including $10 in an electronic wallet. The iPhone does not have a microSD slot and so the retrofit is done through a case, and costs $79.95.

Finally, the fact that NFC phones can also be used as electronic wallets would seem likely to enhance their appeal, but Malhortra fears it will only complicate their acceptance. When used for physical security, what's in the secure element is a matter between the phone's user and the owner of the door. When used as a wallet, various banks, payment card networks, carriers, handset makers, and government regulators are involved and all but the latter are jockeying for a cut of the action, he warns.


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