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Near Field Communication (NFC) technology for instant payments


From UPSC perspective, the following things are important :

Prelims level : Near Field Communication (NFC)

Mains level : Not Much

Google Pay has recently launched a new feature in India, ‘Tap to pay for UPI’, in collaboration with Pine Labs. The feature makes use of Near Field Communication (NFC) technology.

What is Near Field Communication (NFC)?

  • NFC is a short-range wireless connectivity technology that allows NFC-enabled devices to communicate with each other and transfer information quickly and easily with a single touch.
  • It makes possible to pay bills, exchange business cards, download coupons, or share a document.

How does it work?

  • NFC transmits data through electromagnetic radio fields, to enable communication between two devices. Both devices must contain NFC chips, as transactions take place within a very short distance.
  • NFC-enabled devices must be either physically touching or within a few centimetres from each other for data transfer to occur.

When did NFC tech start?

  • In 2004, consumer electronics companies, Nokia, Philips and Sony together formed the NFC Forum, which outlined the architecture for NFC technology to create powerful new consumer-driven products.
  • Nokia released the first NFC-enabled phone in 2007.

How will this technology work with the recently launched feature, ‘Tap to pay for UPI’?

  • Google Pay has been the first among UPI apps to bring the Tap to Pay feature working on POS terminals.
  • It will allow users with UPI accounts configured on Google Pay to make payments just by tapping their NFC-enabled Android smartphones on any Pine Labs Android POS terminal.
  • Once users tap their phones on the POS terminal, it will automatically open the Google pay app with the payment amount pre-filled.
  • Users can then verify the amount and merchant name and authenticate the payment, using their UPI PIN.
  • The process is much faster compared to scanning a QR code or entering the UPI-linked mobile number which has been the conventional way till now.

What are the other applications of NFC technology?

  • NFC tech has a wide range of applications besides driving payment services.
  • It is used in contactless banking cards to perform money transactions or to generate contact-less tickets for public transport.
  • Contactless cards and readers use NFC in several applications from securing networks and buildings to monitoring inventory and sales, preventing auto theft, keeping tabs on library books,
  • NFC is behind the cards that we wave over card readers in subway turnstiles and on buses to check tickets.
  • It is present in speakers, household appliances, and other electronic devices that we monitor and control through our smartphones.
  • With just a touch, NFC can also set up WiFi and Bluetooth devices in our homes, investopedia noted.
  • It also has an application in healthcare, to monitor patient stats through NFC-enabled wristbands.
  • NFC is used in wireless charging too.

How safe is this technology?

  • NFC technology is designed for an operation between devices within a few centimetres from each other.
  • This makes it difficult for attackers to record the communication between the devices compared to other wireless technologies which have a working distance of several metres, according to the NFC forum, a non-profit industry association.
  • The user of the NFC-enabled device determines by the touch gesture which entity the NFC communication should take place with, making it more difficult for the attacker to get connected.
  • The security level of the NFC communication is by default higher compared to other wireless communication protocols.

Where does it stand in comparison to other wireless technologies?

  • There are other wireless technologies available which are replacing cable-based connections.
  • The IrDa technology is a short range (a few metres) connection based on the exchange of data over infrared light where the two communication devices must be positioned within a line of sight.
  • Today, this technology is mainly used for remote control devices. For larger data communication with computer devices this technology was replaced by Bluetooth or WiFi connections.
  • However, for these technologies’ receiver devices need their own power supply due to the larger working distance.
  • Therefore, the receiving device cannot be powered by the radiofrequency (RF) field like in NFC, the NFC forum highlighted.
  • Another consequence of the larger working distance is the need for the user to configure their device and to pair them together for communication.


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