Near Field Communication, or NFC is technology that allows devices to communicate with one another. NFC allows for contactless communication, which means the devices do not need to touch for information to be sent. The technology has only recently started growing in the United States.
What is NFC Technology?
Most smartphones now come equipped with near field communication, but not many users understand how or when to use it. NFC phones, tablets, and smartwatches allow devices to communicate, just like Bluetooth and Wi-Fi.
NFC was built on the foundations of radio frequency identification. An NFC reader, otherwise known as an active device, creates a unique radio frequency current that seeks information from another NFC device. The second NFC device needs to be activated before it can connect.
NFC technology does not need an active connection to the internet to communicate. It does, however, require close proximity. Many devices need to be within an inch of one another for data to be successfully transmitted. The fact that the devices need to be in such close proximity helps keep the technology secure.
One of the ways NFC technology excels over other technologies is because it does not require a pairing to connect. NFC chips run on minimal power, which also sets it apart from other technologies. NFC devices do not have much ability to do any processing on their own but simply serve as means to transfer information.
NFC Technology is Quick, Convenient, and Secure
NFC technology stands out because of the speed, convenience, and security it offers. Many of these benefits can be seen when looking at how NFC technology impacts mobile payments.
Transactions that use NFC technology are processed quicker than other credit card payments. This past year, American credit and debit card holders have been forced to use chip readers. Although secure, these devices are very slow.
Many customers and retailers have been frustrated with transaction times associated with chip cards. There always seems to be an awkward moment during check out where the cashier and customers waiting in line behind you are staring at you as if it’s your choice that your credit card is taking forever!
NFC technology eliminates this problem. NFC transactions are confirmed in a matter of seconds, allowing customers to get on their way. However, the speed of the transactions is not at the expense of security. An NFC payment is just as secure as a chip card. NFC technology uses encryptions to secure the transactions.
Lastly, NFC technology is incredibly convenient. Customers aren’t forced to carry their entire wallet with them. NFC technology allows customers to store their credit, debit, gift, and reward cards in one secure location on their phone.
NFC Phones Can Do It All
NFC phones will continue to revolutionize the way we live our daily lives. They have already drastically changed how we pay. In the future, NFC technology will change the way we travel. Subway tickets, for example, will soon feature NFC technology. Commuters will soon be able to pay their fare at the gate simply by waving their phone.
This will prevent commuters from losing thin, flimsy subway tickets. It will also reduce the amount of time spent at the subway station. Commuters will be able to reload their subway card beforehand in a mobile app so that they do not have to do so at unsecured kiosks in the station. If fewer commuters use the kiosks, city governments will be able to save money on maintenance and processing fees.
NFC phones will also be able to store coupons, maps, and countless forms of other information. Have you recently seen square barcodes on posters or advertisements? These are called QR codes, or NFC tags. They are supposed to be scanned by your phone using NFC technology. An NFC tag can provide an abundance of digital information. Android Authority further elaborates on the benefits of NFC tags.
NFC in mobile devices already allows them to communicate with each other over a peer-to-peer network. Establishing an NFC connection between two mobile devices allows them to send large amounts of data. Phone contacts, pictures, videos, and more can be sent via NFC.
NFC phones also provide an added level of security. Phones today offer many forms of security. Users have started accepting two-factor authentication, opting to provide a passcode and face or fingerprint identification. If someone loses their phone, their financial information is stored securely on their phone. If they choose, users can remotely wipe their phone’s hard drive clean, erasing all financial information.
Many of the mobile payment apps offer their own form of security. Users may have to enter another passcode before accessing their mobile wallet. These apps also do not store credit or debit card numbers, so information cannot be pulled for non-NFC use.
Tap to Pay
As mentioned, one of the areas NFC technology has drastically improved is the way customers pay for transactions.
Tap to Pay refers to the way in which NFC technologies work with payments. Users pull up their payment card on their mobile app and scan it over an NFC reader. It’s as simple as that.
One of the biggest problems Tap to Pay has been facing is slow growth in the United States. NFC technology is very popular in Asia and Europe, but it has only just recently begun catching on in America. For example, in 2015, over 350 million consumers in China took advantage of mobile payments. Chinese consumers use mobile payments for everything from meal delivery to local market stands.
Retailers are expected to continue to add NFC readers to their stores over the coming years. Other retailers have taken NFC technology one step further, and have created their own mobile apps. These apps are free and can be used to preload funds for payments. They are best for places where customers frequently shop, like restaurants and coffee shops.
Chip cards, which run on EMV technology, have ironically increased the use of NFC payments. Retailers were required to install new payment terminals to support EMV technology. EMV-capable payment terminals have also integrated NFC technology as an added benefit to consumers. The biggest benefit of EMV-supported payment terminals may actually be the fact that they double as an NFC reader.
Three Main Mobile Payment Platforms
There are three main platforms that can be used for NFC transactions. All three come preinstalled on today’s new smartphones, and can also be downloaded from a phone’s mobile app store. Users can easily upload their payment methods to the app and can be set for payment in a matter of minutes.
These apps are all supported by the main US credit card companies, so users should not have a problem adding at least one card to their wallet. All three platforms allow users to collect credit card and brand rewards.
If customers pay with a card that offers cash back or airline rewards, using NFC technology will not prevent a user from receiving these benefits. These benefits are tied to the credit card companies, not the payment methods.
NFC Samsung technology is found on all Samsung phones and tablets, but it has increased in popularity because of Galaxy devices. Samsung Pay supports over 1000 banks and credit unions and expects to add more over the coming year.
Samsung Pay also takes advantage of Knox tokenization to protect transactions further. Tokenization deliberately spoofs a credit card number after it is scanned. The payment still processes, and the customer is still charged, but their credit card number, for the purposes of the transaction, is changed.
Samsung Pay is unique because it allows users to accumulate reward points. They also offer promotions to their customers, which is something typically only seen in retail-only mobile payment applications.
Android is an operating system, much like iOS is the operating system for Apple. Whereas Apple is the only company to use iOS technology, many manufacturers use Android technology. In fact, Samsung products operate on an Android operating system. Generally speaking, Android pay will work on all non-Apple smartphones.
A potential benefit of Android Pay is that users do not need to open the app to make a payment. If their hands are full, they simply need to make sure that their phone is unlocked and then hold it near the terminal.
Android Pay also uses a system similar to Samsung’s tokenization to provide an extra layer of security for the financial transactions.
Apple Pay was the first mobile platform to integrate NFC technology. It is exclusive to iOS users. Apple iPhones, iPads, and smartwatches all contain NFC technology.
Apple Pay recently began offering a cash option, which allows for direct peer-to-peer money transfers. Apple Pay Cash is similar to PayPal and Venmo. NFC technology is not required for transactions to be processed but is a benefit not seen in Samsung Pay or Android Pay.