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Near field communication technology was invented by Sony and NXP Semiconductors in the year 2002 and is increasingly being added to smartphones to enable mobile payments and other applications. NFC standards cover communications protocols and data exchange formats, and are based on existing radio-frequency identification(RFID) standards including ISO/IEC 14443 and FeliCa.[3] The standards include ISO/IEC 18092[4] and those defined by the NFC Forum, which was founded in 2004 by NokiaPhilips and Sony, and now has more than 160 members. The Forum also promotes NFC and certifies device compliance.[5] It fits the criteria for being considered a personal area network, since it utilizes bluetooth technology and can be used to communicate between devices. Near field communication (NFC) is a set of standards for smartphones and similar devices to establish radio communication with each other by touching them together or bringing them into close proximity, usually no more than a few centimeters. Present and anticipated applications include contactless transactions, data exchange, and simplified setup of more complex communications such as Wi-Fi.[1]Communication is also possible between an NFC device and an unpowered NFC chip, called a "tag".[2] 

 NFC always involves an initiator and a target; the initiator actively generates an RF field that can power a passive target. This enables NFC targets to take very simple form factors such as tags, stickers, key fobs, or cards that do not require batteries. NFC peer-to-peer communication is possible, provided both devices are powered.[6] A patent licensing program for NFC is currently under development by Via Licensing Corporation, an independent subsidiary of Dolby Laboratories.

 NFC tags contain data and are typically read-only, but may be rewriteable. They can be custom-encoded by their manufacturers or use the specifications provided by the NFC Forum, an industry association charged with promoting the technology and setting key standards. The tags can securely store personal data such as debit and credit card information, loyalty program data, PINs and networking contacts, among other information.

What's the difference between RFID and NFC?

When acronyms attack, people get confused. That's especially true when two acronyms stand for a couple of very similar wireless technologies. In this case, our geeky acronyms are NFC and RFID, two close cousins in a world filled with wireless wizardry. NFC stands for near field communication, while RFID means radio frequency identification. Both employ radio signals for all sorts of tagging and tracking purposes, sometimes replacing bar codes. NFC is still an emerging technology; RFID, however, is currently in widespread use all over the world. 

RFID tags contain an antenna and a memory chip that stores data. To see that data, you need an RFID reader. These tags and readers are used in a mind-blowing array of applications. NFC technology is a newer, more finely honed version of RFID. It operates at a maximum range of about 4 inches (10 centimeters) and can be set up for one- or two-way communications.

 Let's start with a one-way NFC data transfer. Using your NFC smartphone, you can tap NFC smart tags that might appear in everything from promotional movie posters and political flyers to museum tour placards. Smart tags are a lot like RFID tags; they're simply tuned to work with an NFC reader instead of an RFID one. Near field communication's capabilities go far beyond being a short-range, RFID stand-in. On the next page, you see where NFC and RFID come to a fork in the road -- and say their goodbyes once and for all. RFID is a one-trick tech: A reader detects and pulls information from a tag. That's about the extent of these systems. NFC is more complex. As you just read, NFC duplicates RFID's feat by reading smart tags, thanks to its read/writeoperation mode. But in addition to read/write capabilities, NFC has two other modes, both of which involve dynamic, two-way communication: card emulation and P2P (peer-to-peer). That's where smartphones and other NFC-capable devices come into play.
 
By 2014, 50 percent of smartphones will have integrated NFC chips that basically turn your phone into a digital wallet. Touch your phone to an NFC checkout terminal, and the NFC chip automatically leaps into card emulation mode. 
 The Near Field Communication Forum was formed to advance the use of Near Field Communication technology by developing specifications, ensuring interoperability among devices and services, and educating the market about NFC technology. 

The Near Field Communication Forum was formed to advance the use of Near Field Communication technology by developing specifications, ensuring interoperability among devices and services, and educating the market about NFC technology. 

 Google Wallet uses NFC to store your payment information, transaction history, offers and more, with . everything synced to the cloud. 

Google Wallet uses NFC to store your payment information, transaction history, offers and more, with . everything synced to the cloud. 

 This app lets you to write links to NFC tags that will start Music Mixes.

This app lets you to write links to NFC tags that will start Music Mixes.

 Atria Books has announced the release of the company’s first “smart book,” a physical book tagged with an NFC chip that provides the reader with additional content.

Atria Books has announced the release of the company’s first “smart book,” a physical book tagged with an NFC chip that provides the reader with additional content.

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In one tap, you'll pay for your groceries, redeem electronic coupons and collect loyalty points. It's called contactless payment. Your phone, in other words, replaces all of those credit, loyalty and gift cards, making payment and rewards redemption much quicker and more convenient.

RFID knows its role. It's mainly a critical tracking and inventory control technology. But RFID's little cousin NFC is still evolving. It'll be years before NFC grows fully into its skin, and when it does, it will likely be as ubiquitous and useful as its RFID kin.