What are NFC payments, and how do they work?

What are NFC payments, and how do they work?

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Near-field communication payments

In the world of payments today, there are seemingly countless ways to complete a transaction. If your business isn’t already using near-field communication (NFC) payments, you might be curious about what they involve and how you might be able to get started. Continue reading below to learn about the details and how your business can benefit from NFC technology.

A brief history of NFC technology

NFC technology was developed by the companies Sony and Philips in the early 2000s. It’s based on radio-frequency identification (RFID), which is a similar technology that had been in use for some time using radio waves.

The first use of NFC for contactless payments was in 1997, when Speedpass could be used to pay for gas at Mobil gas stations via a key ring. Since then, it has evolved to include payment cards, key fobs, stickers, smartphones, and tags. Its popularity can be attributed to cutting out the hassle of swiping or texting to make payments while still offering a high degree of security.

What is NFC technology used for?

Though most may be aware of NFC’s use for payments, there are many other applications for this technology, such as to

  • Transfer small files between phones
  • Configure wireless services
  • Redeem tickets
  • Venue and location check-in
  • Unlock car doors, rental transportation and office locations

Below is information on NFC technology in the payment world, and how businesses can use it to their advantage.

What are NFC payments?

NFC payments are a form of contactless payment that uses near-field communication. NFC wirelessly transfers data via a smartphone, laptop, tablet, or other device by sharing it with another device. This technology is behind contactless payments through a mobile payment option, which includes Apple Pay, Samsung Pay, Google Pay, and contactless cards.

Mobile phones that allow users to pay come equipped with NFC technology. A consumer can pay using options such as the ones mentioned above. But not all phones are equipped with NFC technology, particularly if they’re older models.

How do NFC payments work?

NFC functions on a chip that contains a specific RFID radio frequency. When two chips are close together, they can create a contactless connection between devices. This enables the transfer of information, including the data needed to complete a transaction.

NFC technology has three modes of operation:

  • Card emulation. This mode enables monetary transactions.
  • Reader/writer. This mode enables the user to interact with tags.
  • Peer-to-peer. This mode enables two NFC devices to exchange data.
Uses of NFC

What are the benefits of NFC payments?

There are numerous advantages to businesses and consumers alike using NFC technology for payments:

  • Faster checkouts. Contactless payments may be up to 10 times quicker than other payment forms.
  • Better customer experience. Customers are increasingly seeking out more convenient ways to pay, and NFC payments certainly fit the bill.
  • Improved security. NFC is more secure than swiping a card to pay, and has been linked to a decrease of in-person credit card fraud.

How secure are NFC payments?

NFC payments are very secure. Safety features include the device itself, which must be located close to another NFC device and authorised by the user to complete a transaction. Then, the data involved in the transaction are digitally signed. Plus, with mobile NFC payments, the card numbers are not used anymore, as they're substituted with payment tokens.

The particulars of NFC technology security features are discussed in greater detail below.

NFC technology security features

First, let’s look at the user’s device. When using an e-wallet for payment, the user may need to unlock the app on their device and select the payment card they wish to use. Only then can they complete a payment. That, however, isn’t the case for all types of mobile devices. It’s up to the user to choose features like password access, or adding anti-virus software to their device.

Then, there’s the technology security features. NFC often uses a secure channel and encrypts sensitive information, like credit card numbers.

Furthermore, it’s important for a consumer to consider the danger of carrying multiple payment cards in a wallet or purse. If stolen, these can be easily used by fraudsters. Carrying a smartphone that has to be unlocked with Face ID or fingerprint, however, is a more secure way to store payment information.

NFC technology security issues

No technology is free from risk. At kevin., we’re always focused on security. Our NFC payment method doesn't allow routed devices. Furthermore, this type of payment doesn’t allow money to be stolen from one account and moved to another. Users must give specific permission to move money.

That isn’t, however, the case with all NFC payment providers. As such, it’s important that you know the risks to your business. The security issues involved with NFC payments include

  • Eavesdropping. It is possible for a fraudster to “listen in” on NFC transactions. But the methods that hinder this include proximity, since the devices have to be close to send signals. Secondly, the secure channels used for NFC payments are encrypted, and only authorised devices can decode payment information.
  • Data corruption, manipulation, or interception. Fraudsters can manipulate, interfere with or intercept data being sent to a reader, making it useless or corrupted when it’s received. When secure channels are used for communications, this cannot occur. Some NFC devices are equipped to listen for these attacks and prevent them from happening.
  • Theft. If a phone is stolen, it can be used to make purchases. Users of smart devices should make sure they’ve installed passwords, Face IDs, fingerprint identification or another form of security, so that the device can’t be accessed by an unauthorized person.

How customers pay with NFC

To pay with NFC technology, customers have two options:

  • A tap-to-pay card. A card containing NFC technology is used to transfer payment information to make a purchase. The customer places a card near the payment terminal that is NFC-enabled.
  • Mobile devices used as a card. Smartphones and other devices use apps that hold payment information. That means a payment can be made using a mobile device.

kevin.’s point-of-sale solution is the first of its kind, allowing businesses to use their existing POS device to take advantage of account-to-account (A2A) payments. Customers can pay directly in-store using NFC technology on their mobile device, eliminating the need for bank cards and their associated fees and long processing times.

How can merchants accept NFC payments?

If a business wants to start accepting NFC payments, they will need to get the necessary equipment. That includes an NFC-enabled reader. Additionally, they need to work with a payment infrastructure that can accept this form of payment, as kevin. does. Once these are in place, all a customer has to do is place their smartphone by the reader, and the transaction can be completed.

How kevin. can help

Consumers are increasingly using less cash and choosing digital payment methods, including those enabled by NFC technology. Research demonstrates that mobile wallets have a large share of in-person transactions, valued at over $13.3 trillion USD.

With those kinds of numbers, business owners have to make sure they don’t get left behind. Thanks to kevin.’s first-of-its-kind POS solution, they don’t have to be. Businesses can reap all the benefits of A2A payments while still using the same POS device that their customers are used to.

Frequently Asked Questions

What is NFC technology?

Near-field communication, or NFC, is a form of technology that enables communication between two devices. It is often used to complete contactless payments.

Is NFC secure?

NFC payments offer an excellent balance between security and convenience when it comes to payments. Since they’ve been commonly used for more than a decade, the technology and security standards have continued to evolve over time to ensure that balance is kept.

How do I accept NFC?

To accept NFC payments, businesses need to have an NFC-enabled reader. A customer simply needs to have a mobile device that is capable of making contactless payments to complete the transaction.

Marilyn Starkenberg
Content writer
Marilyn has worked in content writing and strategy for nearly a decade. She enjoys doing deep dives into the ever-changing world of open banking and sharing how kevin.’s innovative payment infrastructure can be a game-changer for businesses. Her specialty is breaking down what sound like complex topics and making them easily digestible for all knowledge levels.