What is NFC payment

NFC (Near Field Communication) is a wireless data transfer technology. Its main peculiarity and difference from Wi-Fi or Bluetooth are that with weak signal strength, it provides an instant connection and quick information transfer. Devices with NFC chips exchange information at a short distance - up to 5 centimeters.

Technology is used in different ways. For example, some restaurants use NFC tags to transmit passwords and Wi-Fi network settings to visitors' smartphones. But its most mass application is the contactless payment with the help of mobile gadgets. As a rule, those are smartphones with NFC chips, but they can also be watches, bracelets, or rings.

It works like this. A customer brings a gadget to a payment terminal equipped with an NFC chip. It transmits encrypted bank card data, followed by a successful payment.

Why are NFC payments so popular?

It's convenient

In the past, to pay with a card, one had to take it out of the wallet, run it through a terminal and wait for the terminal to read the data from the magnetic strip or the chip. All of this took quite a bit of time, sometimes up to a minute, during which customers had to dutifully wait outside the cash register. Not to mention the fact that you had to control that the card was always with you.

With the advent of contactless payment, everything has changed. At first, there were cards with NFC chips which you still had to carry with you but you didn't have to put them in a terminal, you could just put them in the terminal. Bank customers liked it. But the main breakthrough came in 2018, when the mobile payment systems Apple Pay and Google Pay, which allow you to forget about your wallet and pay in stores, cafes, and transport with just your smartphone, started working in the world. And now such systems transactions are developing at a breakneck speed https://blockchainreporter.net/abu-dhabi-islamic-bank-adib-launches-first-tokenized-contactless-payment-method/.

In other words, it was no longer necessary to carry a credit card, much less cash. All payment data is stored on the mobile device in the electronic wallet. And the electronic copy of the card has all the same properties as the plastic original: it will earn cashback, accrue miles, accrue interest on the balance, etc. when paying.

Customers liked it even more. So much so that they provoked an avalanche-like growth of contactless payments, making Ukraine one of the world leaders by their quantity.

It's safe.

It's even safer than paying with a regular plastic card. Mobile payment systems have a multilevel security system.

First, the number of cards added to the electronic wallet is not stored at POS terminals or on the servers of payment systems. Instead of it, a unique account number is assigned to the device, which is encrypted and stored locally - a token. It is used for payments instead of card data. That is, when paying with the phone, the customer doesn't give the merchant his credit card number or his personal information.

Secondly, one-time security codes are generated for each payment transaction.

Thirdly, NFC payments will work only with those gadgets, which are protected by password or biometric identification technologies. To pay, the customer needs to identify himself by entering a code or scanning a fingerprint or face. This means that even if a criminal steals your phone, he won't be able to spend money on your credit card.

All of this protects your money better than a card with a magnetic stripe or even a chip.