by Editorial Team
April 26, 2016

How NFC simplifies and speeds up the payment process at the point of sale

In recent years, mobile payment has further established itself based on the international transmission standard NFC – the basic prerequisite. But what exactly is NFC?

Near Field Communication (NFC) is a set of close-range wireless communication standards. Simply put, it’s a method of wireless data transfer that detects and then enables technology in close proximity to communicate without the need for an internet connection and low electricity consumption.

NFC already started in the early 1980s

For one or the other maybe surprisingly – NFC already truly started in the early 1980s in the form of radio frequency identification (RFID). This technology allowed the user to send radio information to a receiver where it was identified. RFID is an excellent technology for tracking purposes and for the purpose of using it for security tags in retail locations.

In 2004, Nokia, Sony, and Philips came together to form the NFC Forum with the goal to promote the security, ease of use, and popularity of near field communication.

Right now, NFC is on the way to hit the mainstream

Right now, NFC is on the way to hit the mainstream: Nearly all solutions in the field of Mobile Payment base on NFC. The biggest Smartphone Supplier count on that technology.

NFC is most commonly associated with the mobile wallet – corresponding to the idea that your smartphone will completely replace your cash and credit cards. Just a tap or a wave on your phone and you can pay for your groceries or redeem a coupon or voucher.

NFC is, in general, faster than Bluetooth

Thereby, NFC technology is relatively simple. It allows users to wave their smartphone or tablet over a NFC compatible device to send information without needing to touch the devices together or to go through multiple steps setting up a connection which would indeed be very time-consuming. And it is faster than Bluetooth, in general.

NFC operates as one part of a wireless link. Once it has been activated by another chip, small amounts of data between the two devices can be transferred when held a few inches from each other.

NFC can operate in three different modes

  • Reader / writer mode: Reader / writer mode enables NFC-enabled devices to read information stored on NFC tags embedded in smart posters and displays, providing a great marketing tool for companies.
  • Peer-to-peer: Peer-to-peer mode enables two NFC-enabled devices to communicate with each other to exchange information and share files.
  • Card Emulation Mode: Card emulation mode enables NFC-enabled devices to act like smart cards, allowing users to perform transactions such as purchases, ticketing, and transit access control with just a touch. In Card Emulation mode, the NFC-enabled devices communicate with an external reader like a traditional contactless smart card thus enabling contactless payments and ticketing.

 Stickers allow customers to make tap and go payments

Wirecard has developed an NFC sticker featuring technology that bridges the gap for smartphones that were not NFC-enabled. The sticker includes all customer credit card information and is attached to the back of the smartphone, allowing them to make tap and go payments using their smartphone.

In the last years, more and more smartphones support the wireless technology based on induction, which allows mobile payments after copying an NFC-enabled credit card. The data needed for the transactions are encrypted on the so-called Secure Element (SE). The SE is placed either on the device itself (Embedded Chip, MicroSD) or is – as in most cases – part of the SIM card.

Here are the key benefits of NFC

It’s a reasonable choice for secure transactions

Unlike many other wireless technologies, NFC has a short range of about 1.5 inches. This makes it a reasonable choice for secure transactions, such as contactless credit card payments.

The Battery of the customer’s smartphone is not drained

An additional benefit of the short distance between card reader and mobile device is that a relatively weak signal is sufficient for the data transfer. Therefore the battery of the customer’s smartphone is not excessively drained.

It is up to 50% faster than conventional card payments

The length of the payment process at the point of sale can be considerably reduced through NFC technology. Customers simply need to briefly hold their smartphone above the card reader device in order to complete the transaction. The average time-saving in comparison with cash transactions is around 25%, and it is even up to 50% faster than conventional card payments.

More and more retailers will include campaigns in the future

As voucher and customer loyalty programs can be directly linked to payment transactions via NFC-enabled smartphones there is great potential for growth in the market: High street retailers have the option of incorporating marketing campaigns into the checkout process at the till.

If retailers make cashless, mobile payments possible for their customers, they save on the costs incurred in relation to the handling of cash. This also applies to costs resulting from long queues at the tills.

In sum, conditions couldn’t be better for NFC – the standard technology for mobile payment.