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What is NFC – Near-Field Communication definition

Integrated in many digital devices, NFC is a technology that is becoming increasingly popular. It has become a standard in communications. However, this convenient acquisition remains a mystery to many people and its full potential is yet to be explored. 

So, what is NFC or Near-Field Communication, and how does this technology work? What are NFC payments and how secure are they? These questions can be answered by a few and if you are not one of them, don’t worry – we’ll clear things up for you!

What is NFC and how does it work?

NFC, or Near-Field Communication, is a technology that provides easy contactless sharing of information between different devices that support it through a digitalised tag. Typically, it is used to make payments and identify or exchange data. Most often, one of the devices involved in the data exchange is a smartphone.

This type of technology means “communication in close proximity”. In other words, it is a technology that allows different digital devices to exchange information when placed side by side.

Derived from the Radio Frequency Identification (RFID) technology which is usually equipped in magnetic access cards, NFC has almost infinite potential. It allows smartphones, tablets, and even laptops to share data, photos, music, and more with ease. 

But this wireless technology goes even further. It limits data exchange within a perimeter of about 4 centimeters. Therefore, we consider NFC a much more reliable payment alternative than credit or debit cards. This is one of the primary advantages of Near FIeld Communication in terms of security, making it especially common when processing contactless payments.

It’s good to mention that EMV and NFC payments are two separate things. That being said, EMV chips can be used for NFC payments as well. EMV, which represents Europay, Mastercard, Visa, is a security standard and installment tech that is associated with the chip in your credit/ debit cards.

What is an NFC tag?

Also called smart or information tags, NFC tags have a certain amount of memory, paired with a radio chip and a receiving wire. Near-Field Communication tags don’t have a power source because they collect energy from the reader device. For example, when you hold the tag next to a card reader, the chip is being powered while both devices transfer information. 

You can use the NFC tag when you need a fast transfer of digital data and the most common places to find such tags are smart devices. Near Field Communication tags allow smartphones to make payments via a single tap or a hover. Regarding expected uses for it, there are currently no limits established.

Paying by phone with NFC

A vector image of a phone with NFC

At first glance, it may seem that NFC is an unnecessary extra for most modern mobile phones, but it is indispensable with data exchanges and especially contactless payments. When paying with a mobile phone, Near-Field Communication plays an important role.

NFC serves as a mediator for contactless communication between two digital devices – laptop, smartphone, mobile phone, or tablet. It is most often used to make contactless payments, similar to payments with credit or debit cards. The enormous advantage of NFC over card payments, however, is the significantly improved security it offers.

In addition, this tech provides other amenities. For example, unlike Bluetooth, it does not require any manual settings or waiting time for devices to be detected and paired before they can exchange information. With Near-Field Communication, the two devices connect quickly, processing automatically any data exchange when they are 4 cm or less from each other. When all conditions are met, the devices transfer information and prompt the user to perform some action – such as a contactless payment on card readers.

Unfortunately, things can get a little complicated here because not all credit card machines are equipped with NFC technology. Being a tech, developed in recent years, it is only available in newer models of payment terminals – for example, those offered by myPOS. Therefore, before you try to make a contactless payment, make sure that both devices you use support Near-Field Communication.

Did you know that you can use your smartphone as a card reader instead? All it requires is, and you’ve probably guessed it, that your device has an integrated NFC chip. Using a soft POS app like myPOS Glass, all that you need to do is enter the amount and hover a credit or a debit card that supports contactless payments.

Making contactless payments with NFC

Besides the payment processing device, contactless payments with NFC require you to have the following two things:

  • A mobile wallet
  • And a phone equipped with a Near-Field Communication chip

Let’s look at each of these two prerequisites separately.

Mobile wallet

What is a mobile wallet? This is a virtual wallet that is very similar to a credit card. Usually offered as a banking service, the user loads a predetermined amount of money into the wallet and manages it via a mobile phone.

The great convenience with virtual wallets is that the user can store a certain number of credit or debit cards and top it up as soon as needed. In other words, such technology provides a simple way to make payments when shopping in some stores.

Mobile wallets require you to install an application on smartphones or smartwatches running on Android, iOS, or Windows Phone. You can download the often free application from the online store of the creator of the respective mobile OS. All that you have to do is create a profile and load your mobile wallet to make payments through it.

This is where the magic of Near Field Communication comes in – thanks to this technology, you can only make a payment by bringing your smartphone closer to the merchant’s card reader without having to look for cash or for your credit/debit card. Some of the most popular mobile wallets at the moment are Apple Pay and Google Pay Each of these is compatible with all credit and debit cards, but Apple Pay can only work with certain models of mobile phones.

Also, before settling on a particular type of mobile wallet, consider whether it offers you the functionality you need and what cards you will use it for – credit, debit, loyalty cards, or even gift cards. It is extremely easy to operate with and some additional features included are electronic gift cards, immediate receipt of sent funds, and no monthly service fees.

Phone equipped with NFC

A phone paying on card reader with NFC

Of course, you can’t make a contactless payment if you don’t carry your contactless card, a smartphone, or a smartwatch. Keep in mind, however, that unfortunately not all smartphones have built-in NFC chips, so before you start such a transaction, first check that your smart device has one.

Not sure if your device supports Near-Field Communication? Simply check your phone’s settings. If this feature is available, you could activate it in the same options.

The potential of NFC chips

The future of NFC looks promising – this technology is enjoying widespread acceptance in more and more digital devices. Those chips are cheap and easy to produce and embed in a tag. All of this further contributes to the high demand for Near-Field Communication.

We also use Near-Field Communication for purposes other than payments and file sharing – such as distributing information materials during conferences, weather forecasts, social media notifications and even finding cafes, restaurants, gas stations, and local pharmacies.

The small size of NFC chips allows them to be attached in numerous places and on many products. In addition, they can be programmed to perform a number of tasks. That is why this technology will certainly become an indispensable part of our daily lives.

Security with NFC payments

As with any type of payment, NFC payments comply with the strictest security and safety requirements. Almost all mobile wallet developers use state-of-the-art security technologies, including encryption and tokenisation. This makes the use of digital payment methods more secure than the physical use of a credit or debit card. Keep in mind that losing your smart device may lead to more serious issues, especially if your mobile wallet has a weak password.

Is NFC dangerous?

According to specialists, NFC is essentially secure because of its incredibly short reach. To catch your Near Field Communication signal, a hacker should stay close to you, and unless it’s a family member or a friend of yours, you’ll most likely notice if someone shabby is around. You can turn the NFC on your smartphone on and off whenever you need to use it, for example, when paying at a restaurant or at a store. 

There are some risks related to smart tags, for instance, hackers can modify tags by breaking the encryption and stacking their noxious code inside. That may cause a transfer of private data to an unauthorised device whenever the Near-Field Communication chip and your phone exchange information.

Conclusion

Now that you know what NFC is, you can hop on the trend and enjoy ever-increasing convenience and security. It is only a matter of time before you find the ease with which you can make payments via smart devices, especially since all the prerequisites are already in place. And if you’re a merchant, rest assured that all myPOS card readers have a Near-Field Communication chip integrated within them.

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