The Nokia 6131 NFC (for Near Field Communication) is one stealthy handset. Released earlier this year by a crack team of Nokia undercover ninjas (aka Nokia Emerging Business Unit), the phone offers pay by touch, touch ticket and other very cool RFID applications inside a conventional phone form factor. Basically they’ve embedded an RFID chip into the top part of the flip lid. We got a heads up on the technology from Richard Humbach, Head of NFC Business in Finland a while back, and it was very interesting.

Think of it basically as a smart card in your phone and you’re on the right lines, which means paying for travel tickets and purchases just by waving or touching the handset at the barrier, paying for goods and services the same way, unlocking security doors or even acquiring more information via smart billboards (Mobicom has been testing this tech out in Austria). This longish Sliding Doors type Nokia NFC video explains all in detail. Of course for many people, the idea of having everything embedded on your handset is rather scary (especially if you’ve lost a phone or two in the past), but the Nokia peeps think that the use of PIN codes for transactions and the phone security itself should be enough.

“We’ve taken a lot of care with the security aspects of the system,” says Humbach, “We’ve also implemented the security element on the SIM rather than the handset, to emphasise that we’re not trying to sidestep the operators”.

So far the company has been involved in a number of trials in 2007, including one in New York which put a PayPass Card in the handset. Humbach is suitably bullish about the future potential for the tech, which is probably understandable.

“We’re the first company to produce a phone which can work with existing RFID infrastructure, and we’re working very closely with VISA to develop the technology for the future. There are 3 billion mobile subscribers in the world right now, and by 2010 we believe that NFC handsets will have reached mass market status.”

It’s an ambitious statement, and his charts paint an equally bold vision. According to Nokia research, by 2012 there should be 300 million of us using our mobile phones as credit card or e-wallet touch pay systems. Humbach says that adoption would be even faster if it wasn’t for the fact that the mobile operators are dragging their heels. “We definitely need the operators to move faster”.

One of the most innovative uses for NFC phones is currently in India, where there’s a trial underway to authorise pension disbursements in rural areas, using NFC handsets as an authentication token (via the wireless connectivity). Six banks are on board including the Bank of India and apparently it’s working very successfully for all the parties involved.

The real prize for any NFC project, however, is to bag a big win, and at the moment the biggest game in town is London Transport’s RFID based Oyster Card scheme in the UK, which has over 10 million users and growing. The scheme has already attracted a VISA tie-in which embeds the train ticketing with a standard BarclayCard OnePulse credit card, and it’s clear that Humbach and his team would love to carve out their own piece of the action with Nokia NFC handsets. Whoever wins something like this is likely to have a head start on the market, and right now it seems that no-one, including the Japanese with the proprietary Sony FeliCa system, is in the running for a major international project of this size. So at the moment it’s all to play for.

“Funnily enough, one of the issues we face with something like this is the physical use of the device,” says Humbach, “Customers of current RFID pay cards like Oyster are taught to touch the card onto the reader, which is something that could cause problems if you imagine a handset being tapped onto a hard surface multiple times a day. It’s a matter of making our devices more robust.”

Of course the real question at the end of the day will revolve around customer acceptance. Will we all want to have our wallets, keys, tickets and authorisation locked into a relatively vulnerable piece of plastic. What happens when the batteries run out, mid morning? What about those who can’t afford to rent a phone, is it another digital divide in the making?

But maybe, in the same way that we now expect our handsets to come with music players, cameras, clocks and messaging software, in the future we will accept a default RFID handset as normal and switch things on as and when we need them? Convenience really is the key, isn’t it, and the Nokia people are convinced that convenience will persuade us all to jump in.

Here’s some more info on Nokia NFC.