The concept of transferring data wirelessly between two points is not new. Bluetooth and Wi-Fi have been accomplishing this feat for years. Surprisingly, the idea of a contactless payment system has been previously presented but did not successfully land. However, with the introduction of Near Field Communications (NFC), the popularity of contactless payments is growing rapidly.

The Technology Behind NFC

The technology relies solely on two different components: a tag and NFC reader-writer. The tag is a printed circuit that is integrated into an antenna and used to store information. Some devices only have the ability to read NFC tags, where others can read and write data to those tags. To engage in an NFC transaction, the device must at least be capable of reading the information.

An NFC event occurs when two components containing NFC chips and a reader interact within 4 centimeters (about 4 centimeters) of one another. Currently, the mobile phone is the most common device containing NFC hardware. However, with the constant progression of technology, the possibilities are endless.

Advantages to NFC

Because NFC has the ability to transfer general information and manage interactive marketing and financial transactions, there are many advantages to the technology that makes it so powerful.

First, given wireless technology, NFC is convenient and improves customer service through efficiency at retail check-outs. The technology unites a mobile device with a wallet so it only takes a slight touch when used for payments. Recently, Starbucks invested $25 million in the technology to shorten waiting periods for customers in line. The implementation of this technology has given the company a competitive advantage.

Second, NFC is versatile and can be adapted for many different types of situations including bank cards, transit passes, keys, reward systems and movie passes. Therefore, the technology is suited for a variety of industries and uses. It simply requires an amendment to the software that operates the chips.

Third, to the surprise of most, NFC delivers security. When a wallet is stolen, the thief has immediate access to all credit cards and information. However, with smartphones, additional passwords protect the victim from information theft. Also, NFC-enabled cards are more secure than a magnetic strip because many require a PIN, which prevents retailers from accessing personal information.
Fourth, NFC delivers real-time updates so customers can easily track reward systems. Therefore, the information is automatically and instantly updated following a purchase.

Finally, NFC communicates back to the brand manager or manufacturer with real-time data on consumer engagement, preferences and purchase patterns. This powerful analytics tool cannot be over-valued.

Conclusion

NFC technology delivers a host of advantages that makes it a powerful payment, mass transit, marketing and customer service tool. Related innovations benefit businesses and customers, alike. The future is bright for the technology with NFC tags being manufactured on a mass scale as adoption rises. It is only a matter of time before NFC becomes a mainstream tool in the everyday lives of shoppers and businesses.