Near Field Communication (NFC)

Near Field Communication, or NFC, is short-range wireless technology that allows smartphones and similar devices to communicate when they’re within a few inches of each other.  

Near Field Communication

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Near Field Communication (NFC)

Near Field Communication, or NFC, is short-range wireless technology that allows smartphones and similar devices to communicate when they’re within a few inches of each other. This contactless technology has been around for years and has many applications that people use on a daily basis, including synching their smartphones to their cars and paying fares on public transportation. 

NFC is also used for mobile contactless payments at both attended point-of-sale (POS) locations like stores, and unattended locations like vending machines, that use the existing merchant payments infrastructure.

NFC at the POS

NFC transactions are quick and convenient, which helps to keep the customer satisfied and makes it possible for merchants to process sales efficiently. NFC is also compatible with coupon and special offer redemptions that draw in customers and sales.

Perhaps most importantly, NFC transactions are considered to be more secure than those involving traditional magnetic stripe credit cards, which can be stolen or cloned and used for unauthorized purchases.

An NFC-enabled smartphone or other mobile device is set up with a payment app and payment account information, typically a credit or debit card. Shoppers simply wave or tap the device — or an EMV® chip card — in front of an NFC receiver at checkout. They may also be required to scan a fingertip or provide a passcode to approve the transaction.

The receiver reads the signal and the transaction is validated by the internal Secure Element (SE), where personal and financial information is stored. Once validation is complete and the transaction is authorized by the processor, the transaction is charged to the shopper’s designated credit card and a sales receipt is issued.

NFC & Digital Wallets

Digital wallet is a term that refers to an electronic device that allows an individual to make electronic commerce transactions. A person can store a wealth of information in their digital wallet, including their ID, driver’s license, health insurance card and loyalty cards, as well as credit card account data, which can then be used to make purchases at a POS terminal.

NFC & Secure Processing

As with all electronic financial transactions, security is a concern with NFC. One issue is “eavesdropping” by criminals attempting to steal data. However, since the NFC-equipped device or card must be in close proximity to the receiver, hackers have a very limited range in which to intercept signals. Additionally, there are established secure channels that encrypt the account data, which can only be decoded by an authorized device.

The Secure Element step in the process, which holds authorization power, is critical. Tamper-proof and protected by a unique digital signature, the SE is contained in a chip in the terminal and the customer’s mobile device. Alternatively, it functions virtually in the coud to help protect the transaction from software and hardware attacks.

Physical theft of an NFC-equipped device is another security concern. Digital wallet users are encouraged to password protect their device to keep their private and payment information out of the hands of thieves. 

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Many major retailers are already NFC capable. This “tap and go” technology is expected to grow in popularity with U.S. consumers as more retailers and service providers upgrade to processing equipment that can handle both EMV and NFC transactions.

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