How do NFC/Contactless Payment work?

Payments can be made with a single wave at the PoS terminal. Contactless Payment uses Near Field Communication (NFC). Contact payment systems can be any smart cards, key fobs, debit cards, credit cards. These contactless payment cards are embedded with a chip and antenna that allows them to wave at the point of Sale terminal to verify the data and hence make the payment.

NEAR FIELD COMMUNICATION (NFC)

Near Field Communication is the technology that enables two electronic devices generally two portable devices or smartphones by bringing them within 4 cm (1.6 in) of each other. NFC is also used for social networking, for sharing contacts, photos, videos or files. Many smartphones have this technology inbuilt in them. NFC-enabled devices can act as electronic identity documents and keycards. NFC offers a low-speed connection with simple setup that can be used to bootstrap more capable wireless connection. NFC is originated from RFID that facilitates power supply and communication between two compatible electronic devices. It is a set of short-range wireless technologies, typically requiring a separation of 10 cm or less. NFC tags contain data and are typically read-only. They may be writeable. They can be custom-encoded by their manufacturers. The tags can securely store personal data such as debit and credit card information, loyalty program data, PINs and networking contacts, among other information. The NFC Forum defines four types of tags that provide different communication speeds and capabilities in terms of configurability, memory, security, data retention and write endurance. These NFC tags offer between 96 and 4,096 bytes of memory.

PAYMENT USING NFC

The terminal used for making contactless payment is also known as Tap and Pay. This type of payment proves beneficial to both retailers and the consumers specifically with rest to speed and area. It has increased the ease of the process of payment and advanced the business towards complete digitalization. These contactless systems are highly secured system as they use system as microprocessor chips and technologies such as RFID and NFC. The chip inside the card emits radio frequency waves which are received by the terminal devices as the signals and this initiates the authentication process to make the desired payment.

Contactless debit and credit transactions use the same chip and PIN network as older cards and are protected by the same fraud guarantees. Where PIN is supported, the contactless part of the card remains non-functional until a standard chip and PIN transaction has been executed.