The rise of near field communications (NFC) may require updated regulation, according to the Australian Communications and Media Authority (ACMA) in a report released today.
When included in a mobile device, NFC technology allows shoppers to pay by tapping their smartphones against a payment terminal. NFC-enabled phones can also offer non-payment features, such as wireless exchanging of photos or other files between two handsets.
In the ACMA report (PDF), the agency estimated there will be more than 285 million NFC-equipped handsets in the world by 2014.
Australia is a prime market for mobile NFC transactions to grow because it has 70 per cent smartphone penetration, it said.
“From a regulatory point of view, the shifts in communications and media usage that NFC will enable are unlikely to be adequately reflected in existing legislative or regulatory concepts,” said ACMA chairman Chris Chapman.
“As NFC-enabled transactions enter the mainstream, we believe that consumers using NFC and related apps would best be protected by a single coherent regulatory framework.”
An NFC transaction is a “converged communications activity that combines smartphone device functionality, access to spectrum and the downloading of software applications (apps) to deliver a service,” the ACMA wrote in the report.
“Traditionally, devices, spectrum and communications services were regulated separately. NFC challenges this regulatory model.”
“Privacy and personal data protections remain another important area of regulatory focus in an environment where increasing amounts of personal and financial information can be exchanged using NFC-enabled phones,” the agency added.
Existing fragmented and antiquated regulations around NFC could mean extra complexity and higher costs for the industry and consumers, the ACMA said. The problem may require a mix of government regulation and industry-led initiatives, it said.
“Direct regulation may continue to be needed for some matters,” the agency said. “However, it is increasingly likely that co- and self-regulatory arrangements and communication programs will offer more flexible responses to addressing issues of concern in a dynamic and developing market.”
While the ACMA has predicted NFC growth, a recent Gartner report painted a bleak future for the technology in mobile payments. Gartner predicted that NFC would account for only 2 per cent of total worldwide mobile payments this year and only increase to 5 per cent in 2017.
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