Intrix Blog: What is NFC and Why is it Important?

By Jeffrey Connors
Chairman and CEO

With the recent Apple Pay announcement, allowing iPhone 6 and iPhone 6 plus users to pay using Near Field Communication (NFC) at participating retailers, the dream of making payments using our smartphones at the corner store may soon be closer to reality than ever before.

So, what is Near Field Communication anyway and how does it work? These are questions that many consumers will have as they hear more and more about the technology – and here are some of the answers.

Blog-NFCNFC technology is simple. It’s a short range, low power wireless link evolved from radio-frequency identification technology that can transfer small amounts of data between two devices held a few centimeters from each other. In order for NFC to work, both devices—say your smartphone and a payment terminal at your local drug store—have to have NFC chips and antennas embedded in them.

One of the primary uses being touted for NFC technology is NFC mobile payments. By tapping your phone on a contactless payment terminal in a shop, train station or restaurant the merchant is able to identify your account and take payment through an app on your phone.

NFC offers a huge potential for marketing. You can, for example, tap your phone against an NFC-equipped movie poster or sticker, as long as the paper is embedded with an NFC chip, and more details about the movie will pop up on your phone’s web browser. Also, your smartphone could simultaneously store loyalty cards, coupons, tickets and boarding passes, so you could use your NFC smartphone to transmit and receive data in those accounts too.

And while consumers can already use a tap-to-pay method with some newer credit cards, it’s even faster and easier to use the Smartphone that’s most likely already in your hand rather than digging around for the wallet that holds the credit card.

Is NFC secure? NFC mobile payment provides greater security than plastic cards. NFC technology has varying layers of security, depending on the use case and the hardware. When you link your NFC smartphone to your credit card, your data is actually stored in a tiny part of the hardware. This could be in the SIM card, but it could be elsewhere in the phone, too. And this data is encrypted. On top of that you often have to punch in a personalized PIN on the phone in order to make a payment. And if your phone is stolen, you can freeze or disable your payment account

While NFC acceptance has been a mixed bag in the US to date, we expect that to change. Prior to the launch of Apple Pay, the adoption of NFC-capable registers was climbing at a slow but steady pace.

Now, we believe that the inclusion of NFC technology in iPhone 6 and iPhone 6 Plus is a big step forward for the use of smart devices in commerce. It is important merchants have the POS platform they need for both EMV card payments and secure, NFC-based commerce. This will ensure that they will be able to unlock the potential for exciting new experiences between merchants and consumers.

Bottom line is that for a long time NFC was a promise, but finally it seems it will be a promise kept. Are you ready for NFC?

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