NFC (Near Field Communication) is a contactless technology that enables communication between electronic devices that are near each other. It was developed by Nokia and Sony in the early 1990s, but it wasn’t until the turn of this decade that it started to gain popularity.
NFC transactions have been available in India since 2016, when ICICI Bank launched MobiKwik – a mobile wallet service that uses NFC technology.
The popularity of NFC payments has increased substantially since then, with more banks and payment service providers offering this mode of payment to their customers.
NFC transactions are fast, secure and convenient compared to other modes of payment available today. They require nothing more than bringing your smartphone or card reader within 3 centimetres of another device (like an ATM machine) for a few seconds to complete the transaction. The technology itself is similar to Bluetooth, except for its range which is usually less than 10 metres as opposed to 100 metres for Bluetooth signals.
NFC, which is short for Near Field Communication and often referred to as ‘contactless payments’, is a technology that allows two devices to communicate with each other when they are placed within 4-5 cm of each other. Simply put, NFC is used for mobile payments. It has been in existence since 2002 but the first commercial use of NFC was made by Google Wallet in 2011.
The feature has gained popularity over the years and can now be found in most smartphones and credit cards. Some banks also offer contactless debit cards that can be used to make payments at stores or ATMs that have contactless payment terminals.
How do NFC payments work?
NFC is a technology that allows two devices to exchange information through radio waves. It stands for near field communication, and it is widely used by credit card companies to allow contactless payments. NFC technology can also be used in other areas such as transport tickets, identification cards and even passports.
NFC technology allows users to make contactless payments by simply tapping their phone or mobile device on an NFC-enabled terminal or reader. The payment is then processed through your bank account or credit card account.
NFC payments are one of the most secure payment methods as it requires a biometric verification to authenticate the payment. This almost completely eliminates the risk of fraud as only the user can validate the payment.
Advantages of NFC payments
NFC payments have been available in India for a while now, but they have only been used by a small group of people. This is because the technology was not very widespread, and was mostly limited to large cities. However, with the government’s push for greater adoption of digital payments, methods that enable payments in tier II and III cities are coming into the limelight. NFC technology has a clear advantage over many other payment gateway methods because it can be adopted even in the most remote locations. Since NFC payments operate through radio waves, they do not require a fast internet connection, the way that digital wallets such as PayTM do. It also does not require a very high level of digital literacy as users only have to tap their device to make a transaction. Even users in larger cities without any of these obstacles stand to benefit from NFC payments. As this technology is one of the fastest modes of payment, it can reduce queues and wait times drastically. In India, there are also plenty of scopes to integrate UPI with NFC payments, making transactions even more simple.
NFC payments have been around for some time now but adoption has been low because there aren’t many vendors who support them yet — but that’s changing rapidly.