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Near field communication (NFC) is the technology that enables smart cards to be ‘contactless.’ They use an unpowered chip that communicates with the on-board or in-station fare collection system and deducts value when used. Smart cards or cell phones using NFC only need to be waved over the fare payment machine aboard the transit vehicle or before going through the turnstile leading to the vehicles. This is in contrast to ‘contact’ smart cards, which need to be inserted into the machine. NFC is a specific type of [[radio frequency identification (RFID)]] technology that limits the communication distance to four inches or less.
NFC technology is already in use in mobile phones for other applications, such as transferring files between phones or computers, but it has only been applied for transit payments in a few places (there is a pilot project in New Jersey using Google
==Advantages of NFC==
Contactless smart cards with NFC technology may be easier to use than contact cards for people who have difficulties with fine motor skills. Contactless smart cards also speed the boarding process and are convenient for passengers who prefer to pre-pay for transit service. They also reduce some of the problems associated with cash systems, such as the cost of transporting and guarding cash. However, because of the popularity of cash payment with customers it will likely need to remain a payment option. For this reason, a study in Los Angeles showed that a financial incentive for using a smart card helped to boost its use.
<ref>Transit Cooperative Research Project. [http://www.trb.org/main/blurbs/153815.aspx “TCRP Report 32: Multipurpose Transit Payment Media.”] 1998.</ref>
Because the financial services industry offers NFC-enabled contact-less bank cards, an NFC reader may be configured to accept cash payment in addition to accepting automated fare media.
==Challenges in Application==
Smart cards and NFC technology face some challenges to being applied to transit fare payment. Choosing an open or closed system will determine how much partnership or collaboration will be needed for managing the system. More information on open and closed systems can be found in the article on [[automated fare media]]. Open systems will require more collaboration, but the burden of managing the system can be shared with other merchants or transit providers. Open systems in NFC technology also offer the advantage of giving riders the choice of using their cards for a variety of purchases and uses. For example, in Japan, smart cards are used to pay for transit, as well as public telephones and parking.
<ref name="smartcards">Iseki, Hiroyuki, Alexander Demisch, Brian D. Taylor, and Allison C. Yoh. [[media:Evaluating_Smart_Cards.pdf|“Evaluating the Costs and Benefits of Transit Smart Cards.”]] 2008.</ref> In general, though, benefits and costs can vary widely and, according to one recent study, the costs of deployment and implementation are primarily borne by the system provider, while the benefits are enjoyed by passengers and individual operators.<ref name="smartcards" />