NFC and Payments

Ever since humans started communicating with each other, the methods and the medium of communication has evolved and diverged for millennia.

From short range communication such as tapping a credit card onto a POS terminal to medium range mobile communication with the tower and to the long range satellite communication, all uses a type of light waves, broadly electromagnetic waves that carry the intended information for us.

Electromagnetic waves are a broad spectrum of waves and based on their frequency categorized into infra red, ultra violet, visible spectrum, radio, microwave, X-ray, Gamma.

After printing press, the invention of telephone in the 19th century changed the world in communications. Alexander Graham Bell won the first U.S. patent for the telephone device in 1876. Within two years, the first telephone line was constructed, the first switchboard was created, and the first telephone exchange was in operation. In 1901, Marconi conducted the first successful transatlantic experimental radio communications. His company’s Marconi radios ended the isolation of ocean travel and saved hundreds of lives, including all of the surviving passengers from the sinking Titanic.?

20th century thus saw the shrinking distances with the expansion of wireless connectivity!

Last part of 20th century, integrated circuits and semiconductors replacing old bulky equipments further improved efficiency of communication. A particular invention using a type of radio waves which are short range, later revolutionized the communication between devices. This short range communication otherwise known as Near Field Communication (NFC) was invented by Charles Walton. He got the first recorded patent for an object utilizing the RFID (Radio Frequency Identification) technology in 1983. However, Sony and a NXP Semiconductors invented the new NFC technology in 2002.?

NFC enables the exchange of different types of information, such as telephone numbers, images, payments data, sound files or digital authorizations between two NFC enabled devices such as mobile phones, or between an NFC enabled mobile phone and a compatible RFID chip card or reader that are held close to each other.

For the exchange of information between two NFC devices, a new protocol was developed which is defined in the standards ECMA-340 and ISO/IEC 18092. In the year 2004, NFC Forum was founded by NXP, Sony and Nokia to harmonize the NFC technique and to stimulate its deployment. The NFC forum develops specifications which ensure interoperability of NFC units and services. The NFC Forum certifies NFC units compatible to its specifications from December 2010 onwards.

Near Field Communication is based on inductive coupling, where loosely coupled inductive circuits share power and data over up to 10-20 centimeters. NFC devices share the basic technology with proximity (13.56MHz) RFID tags and contactless smartcards but have several key additional features.

There are many different applications for NFC. Typical applications are:

• Mobile Payment
• Access control
• Data transfer between NFC-units (P2P data changes)
• “Unlock” or “authorize” another service
• Smart Poster
• Ticketing

NFC Operating Modes :

There are three main operating modes for NFC -

Card emulation mode (passive mode) :

Card emulation mode provides the opportunity for an NFC enabled mobile device to function as a contactless smart card in a passive mode. The best examples of emulated contactless smart cards are credit card, debit card, loyalty card, transport cards, access cards. Card emulation mode removes the need for carrying the cards. People carry mobile phones with them most of the time so coupling mobile phones with the human body fits with their use. All credit cards, keys, tickets are already embedded into mobile phones. Hence, there will be more opportunities to integrate daily physical objects into NFC enabled mobile phones.

Applications -

1. Payments - Since 2008 American Express, Visa and Mastercard all started offering contactless cards. By 2011, the smartphones using NFC Card Emulation mode allowed for same tap-to-pay technology as contactless chips. Consumers can load their payment information onto their NFC-enabled mobile phone.
2. Loyalty - Integration of Loyalty programs with NFC payment ID, allows customers to gain points and that can be later cashed or used as statement credits.
3. Ticketing - Travel pass, tickets (theater, flights, buses) can be stored, which can be later present at turnstiles or security checks using card emulation mode.
4. Access Control - Keys can be now embedded into phones – eg: BMW NFC digital car key, Hilton’s Digital Key to check in at their hotel, Disney’s Magic band replacing tickets.

Peer-To-Peer mode (active) :

Two NFC devices exchange information. The initiator device also known as polling device requires less power compared to the reader/writer mode. This mode has two standardized options; NFCIP-1 and LLCP. NFCIP-1 takes advantage of the initiator–target paradigm in which the initiator and the target devices are defined prior to starting the communication. ?An initial handshake is made, and the decision is made by the application that is running in the application layer. Because of the embedded power to mobile phones, both devices are in active mode during the communication in peer-to-peer mode. Data are sent over a bidirectional half duplex channel, which means that when one device is transmitting, the other one has to listen and should start to transmit data after the first one finishes.

Applications :

1. Data Exchange - Important information stored in a mobile device can be securely exchanged with other authorized people using P2P mode. Due to the proximity of the devices, the users will feel confident to share private and important data without the need for sending data over the internet.
2. Money transfer - Users can exchange money between wallets that are stored on their NFC mobiles. Gifts, coupons can be implemented in the same fashion that be exchanged as well.
3. Pairing devices - Bluetooth devices needs less data exchange at the start for pairing. So, NFC can come handy to tap-to-pair the two devices (eg: Headset and mobile). A secure two-way Bluetooth connection between the devices is established.

Reader/Writer mode (active):

In this mode, the NFC device is active and reads or writes data to a passive tag. It detects the contactless smart cards and RDIF tags. In the reader mode, the initiator reads data from an NFC tag that contains the requested data. In the writer mode, the mobile acts as the initiator and writes the data to the tag.

Applications :

1. Smart Posters - Advertising materials or posters equipped with NFC tags can be read by the mobile device. Such tags could contain URL address, coupons, SMS service etc.
2. Remote Marking
3. Remote Shopping
4. Social Networking
5. Location based services

Conclusion :

In this 21st century, as we are coming out of the wave of covid pandemic, next wave of semiconductor technology is rising, as evident from the developments of graphene-based devices that can transform the communications at the quantum level!

Let us swim in the undulating wave of technology for.. efficiently and openly communicating with each other!

References :

https://www.britannica.com/technology/radio-technology/Development-of-radio-technolog
https://lambda.gsfc.nasa.gov/product/suborbit/POLAR/cmb.physics.wisc.edu/tutorial/spectrum.html
https://www.st.com/content/st_com/en/support/learning/essentials-and-insights/connectivity/nfc/nfc-chips.html#:~:text=An%20NFC%20tag%20chip%20is,by%20displaying%20its%20memory%20content.
https://support.diasend.com/hc/en-us/articles/360013387238-Where-can-I-find-the-NFC-antenna-on-my-smartphone-
https://www.trekkyrecords.com/who-contributed-to-the-development-of-radio-communication
https://www.elon.edu/u/imagining/time-capsule/150-years/back-1870-1940/
https://rfid4u.com/nfc-how-it-works/
https://www.codeproject.com/Articles/798447/NFC-Application-Development-on-Android-with-Case-S