What Is NFC and Why Should You Care?
It’s likely that you’ve heard of NFC by now, and even more probable that you’ve used it. NFC stands for near field communications. It is the ability of two mobile devices to transmit information to one another. Your enabled smartphone can ‘talk’ to your friend’s smartphone, an NFC tag on a brochure, or any other NFC enabled device or passive tag. Even if you haven’t used it on your phone yet, you’ve almost certainly used it for contact-less payments with your smart credit cards.
NFC Is Revolutionizing How Payments Are Processed
Many shoppers have been quick to embrace the convenience and security that comes with using near field communications technology for payment processing. The millennial generation in particular, which is becoming the most formidable consumer segment with their $1.3 billion dollars in buying power – and growing – have become the trendsetters for NFC technology, zipping through the check-out process with a tap of their smartphone or a flick of their Apple Watch.
The most adaptable retail businesses have already responded to this trend, updating their terminals with everything the tech-savvy consumer could want. As the ease of wireless, contact-less payment processing catches on, other stores are enhancing their technology and more consumers are coming to expect the efficiency that NFC offers.
How Does It Work?
The development of NFC is rooted in RFID – radio frequency identification. With RFID, companies could easily keep track of goods by transferring data via electromagnetic induction. This technology worked well over large spaces, such as in shipping warehouses or superstores. NFC, on the other hand, works when two portable devices are very close.
NFC operates in three different modes:
- Peer-to-peer – which includes two enabled mobile devices
- Reader-writer mode – where an enabled device will read or write information onto a passive tag, such as on a promo poster
- Card emulation mode – this is the big one; where an NFC enabled device can communicate with an NFC reader, essentially acting like a smart card
When two mobile devices are near one another, they can exchange information. For example, when two smartphones transmit contact info by a simple touch, or even more innovative – although not as universal – when an action figure can give you extra lives for a game you’re playing on your phone when you move the figure by your device.
Like Bluetooth, NFC is wireless. It is perfect for quick, short, secure communications – which is why NFC is becoming the new evolution in payment processing.
The Benefits of NFC
The main benefit of NFC, especially in terms of payment processing, is convenience. To be able to leave your wallet at home and quickly make purchases with the electronic wallet stored on your phone, Apple Watch, or other device, saves time and streamlines the checkout process.
This technology also offers greater security than older payment options such as paying with a credit card. With NFC, a secure channel is established and all sensitive information is encrypted. The only risk, however, is if your smartphone is stolen, with an e-wallet, basically your wallet is getting stolen at the same time.
To safeguard against this risk, services like Apple Pay and Google Wallet offer layers of added protection such as making a pin, password, or touch sensor necessary for each payment.
A powerful benefit of NFC technology for the retail industry is customer engagement and loyalty – with mobile payments, it is easier for businesses to encourage customers to sign up for a rewards program.
Near field communication is really a simple form of technology. It is short, quick, secure, and remarkably efficient, which is why it is winning support in a variety of sectors ranging from fantasy football payment processing to gaming. Right now, NFC payment processing still only accounts for a fraction of payments, but as mobile checkouts becomes the norm, it is only a matter of time before NFC elevates the checkout process to a whole new level of convenience, for both businesses and consumers.