People are gradually embracing mobile devices to manage day-to-day activities like emails, personal banking, and health apps. Owing to these developments, NFC mobile payments are rapidly gaining traction. As time goes on, more and more customers will prefer to pay using their mobile phones due to faster data processing, stronger data security, and better customer-centric functionality.

How Does NFC Function?
NFC is a type of high-frequency near-field wireless communication that is widely utilized in RFID (Radio Frequency Identification) based applications. With the use of radio waves that are similar to RFID labels used in warehouses and stores, both the devices establish a contactless connection. A unique RFID frequency of 13.56MHz is used by NFC chips, which functions similar to Bluetooth and enables two local devices to exchange data over a secured network when they are positioned close to each other.

NFC equipped devices can communicate with contactless payment cards using EMV Contactless Communication Protocol Specifications (EMV CCPS). However, the proprietary payment transaction protocol differs from EMV CCPS which is utilized for the actual card-to-terminal communication.

Mobile devices such as smartphones, laptops, or tablets can share data through NFC's wireless data transmission mechanism that allows devices in close proximity to exchange data. NFC technology also enables mobile wallets to accept contactless payments. Owing to the growing importance of NFC in mobile payments, most users believe proximity control to be a key security element.

Modes of Transfer in NFC
Peer to Peer
Useful for file transfers, this mode permits data sharing between two NFC-enabled devices.

Reader/Writer Mode
In the reader/writer mode, one device performs passively whilst the other one performs actively. The passive device transmits data to the active device. For example, contactless debit/credit cards operate in this way.

Card Emulation Mode
Mobile payment apps leverage this mode wherein the smartphone acts as a digital credit card.

Contactless Payments via NFC
Mobile Apps
The ISO/IEC 14443 standard is used for NFC payment transactions between a mobile device and a PoS terminal. Mobile wallets manage and facilitates payments for NFC-enabled mobile devices. When this happens, an electromagnetic induction link is generated between the device and the PoS terminal. With NFC payment, a one-time unique code is generated, and the card details of the user are captured in the wallet in an encrypted format.

NFC Enabled Contactless Cards
The transaction can be completed by waving or tapping the card reader. As the active device, the card reader is responsible for reading card information from the passive NFC-enabled card. Physical contact between the card and the card reader is not needed.