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NFC Is The Future Of “Frictionless” Payment

By: Jessa Bashier

June 15, 2020


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CREDIT: Christiann Koepke via Unsplash

More companies are looking to make payments more convenient and efficient — hence the development of frictionless payments, with technology like Near Field Communication (NFC) poised to push this technology even farther forward. Already, NFC is making contactless payment safer for both retailers and consumers, especially now, given today’s global health situation. With the world’s two billion or so smartphones having NFC as a standard feature, we will examine why NFC is the future of frictionless payment.

The Present

Frictionless payment is already being accomplished today through contactless or tap-to-pay payments, like those offered by Apple Pay and Google Pay. Services like these are aided by NFC technology that allows consumers to make transactions (Touch and Go), download digital content (Touch and Connect), and share smart cards (Touch and Read) by simply tapping a card or waving their smartphones near the POS terminal. Today, this is fast becoming the norm for customers across the globe.

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The Future

NFC can potentially make frictionless payment the simplest, most convenient, and most secure payment method, thanks to its specific RFID frequency of 13.56MHz, which works only when two chips — the consumer’s and the retailer’s — are nearby each other. This dynamic necessitates proximity, which adds a layer of security against fraud. What’s more, NFC technology requires user initiation, meaning the customer must actively initiate the contactless payment process; otherwise, no transaction will take place.

To ensure security, NFC-aided transactions rely on the tokenization and encryption of payment credentials. In this process, a one-time token is created for each transaction as opposed to asking for and transmitting the customer’s credit or debit card details. Furthermore, NFC-aided contactless payments provide instant confirmation of a purchase, proving that it is being made by an authorized user.

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The possibilities of contactless payment with NFC are endless and they are signaling a future where all our transactions are digitalized. Indeed, it is this ever-changing shift in how we live that is driving more people to study the technology behind these developments. The avenues for professionals who major in computer science is leading many to software development (a 21% increase by 2028) which is helping to push us forward in the information age and beyond. After all, even from a degree level, computer science professionals are trained in competencies like computer architecture, security, programming — all of which can help improve upon and innovate NFC technology. This is one of many reasons why the global market size of NFC payments is expected to reach some $50 billion in 2024 — 900% higher than its 2015 value of $4.80 billion.

NFC User Experience – Fast and Easy

Consumers want everything fast and easy, to the point that Payments Journal now considers friction as the most feared F word in the digital commerce industry. In fact, 66% of people in a study admitted to not having the patience to deal with friction, leading to their abandoning their transactions entirely. This is why developments in NFC will become crucial for the future of frictionless payment and how we purchase goods and services as a society.

The views expressed in this blog are the author’s and not necessarily those of the NFC Forum.

Jessa Bashier is a tech and finance blogger with an affinity for fintech. Armed with knowledge from her previous job as a financial consultant, she’s set out to launch a fintech blog to help today’s generation be smarter with their financial decisions.

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