Transforming Business payment transactions with Near Field Communication (NFC) Technology


The speed at which we transact business has changed and it is becoming increasingly difficult for business which has not deployed technology to compete on a market that has become very global because of the increasing use of digital technologies. Queuing to complete any business transactions is not acceptable in our modern times. Any business operating under the old paradigm which involves a long queueing process is already out of Business. Our current digital-driven generation has no luxury of time. For the average digital native, things must be accurately fast, and perfect. The Near Field Communication (NFC) technology is one of the speed enablers in ensuring fast delivery of business processes. In Japan and many other European countries, NFC terminals are available at train stations and bus terminals for quick self-services.

The Background of the NFC

The name of this device informs even a less tech-savvy person how the device works. The NFC technology traces its roots to the Radio Frequency Identification (RFID) chip which was patent in 1983 by Charles Walton. The Collaboration between Sony and NXP the Semiconductor company resulted in the creation of the NFC technology in 2002. Two years after its invention, many mobile manufacturing companies incorporated it on their mobile devices with Nokia at the forefront. Samsung introduced the NFC on the android platform in 2010 on its Nexus S range of smartphones. (Phone Arena, 2019). Today, leading smart companies like Apple and Google have also introduced it to their payment platforms. Its principle of operation is similar to electromagnetic induction. This wireless technology enables short-range communication between compatible devices using less energy for its operation. Besides its encryption capability, its short communication range at a minimum range of 4 cm to 10 cm maximum makes it difficult for hackers to hack into the transmission of its signals. This range allows data speed of 424 kbps to communicate over the free (industrial, scientific, and medical) ISM radio band of 13.56 MHz (Everything RF, 2010). NFC enabled devices can be operated in three modes of communication namely, the card emulation mode which tries to emulates the credit card functionality. The second mode is the discovery mode which allows interacting with other external sources. This mode allows the user to read or write. The peer-to-peer communication mode is the last communication mode, which allows the connectivity between two NFC compatible devices to interact. An NFC device can also be considered a passive or an active device. The passive device usually requires no power source for its operation while communicating with an Active NFC device.

How the NFC works in the Retail outlet

In business transactions, the NFC payment devices offer three main things that are needed in today’s fast-paced world of commerce. These are namely fast transaction speed, payment convenience, and better user experience for both retailers and a prospective shopper. Apart from its encryption security, the user transacts business using passwords, which increases the security layer. The NFC payment follows this sequence to complete payment as depicted in the diagram below.

  • The shopper sends the shopping wares to paid to the point of sale terminal.
  • The merchant scans the wares to get the total payable amount.
  • The Shopper pays using his E-wallet via his smartphone which is NFC enabled.
  • Both parties receive payment notification to complete the transaction.

Through these steps, this contactless form of payment is completed without cash, debit, or credit card.
The Advantage of NFC technology in Retail business
Although, it is expensive to implement initially because of cost. There are numerous advantages which this form of contactless payment offers to businesses as a payment medium. Below are some strong reasons why business owners should consider the use of the NFC as a transaction payment channel.

  1. It will reduce long queues in retail outlets, which often results in abounded carts because of slow payment processes in the normal payment processes which rely on cash or debit card.
  2. NFC payment model will offset this slow payment process which leads to increased customer satisfaction.
  3. Customers who are served quickly at a particular retail outlet always return. They also inform others about the quick services they received.
  4. The deployment of NFC helps in the reduction of cost of materials needed for printers and maintenance is eliminated. This is also good for our ecology because the cost of recycling is eradicated.
  5. The NFC payment has a lot of features that are not available on the traditional payment model. For instance, with Euro card, Master card, Visa Card (EMV) the information on a client’s card is transferable to another party for fraudulent use.
  6. The implementation of the NFC can help in reducing the workload for personnel. I know that is a problem for many people. But if implemented well, the same staff can work at the same place receiving the same salary but will work fewer hours. This will also result in high productivity.
  7. The NFC technology can be used with other Business Intelligence (BI) tools to check for instance a worker’s location, time spent in a location, overall footfall to manage their output properly.


Cash and EMV payment models have a lot of drawbacks. The statistical prognostications by the Nilson report show that global card losses are expected to yield to about $35 Billion by 2020 (Idex Biometrics, 2019). These numbers are gloomy for EMV users, however, using the NFC technologies, the above-predicted losses can be reduced to the barest minimum or eliminated entirely. Additionally, losses due to theft and the temptation to steal money are reduced as workers at POS terminal have no access to cash. Finally, with consent from the Central Banks and a relevant proper legal framework in place, taxes can be transfer directly to the tax revenue authority. This process widens the tax net and improves the tax revenue collection. Above all, the speed in transacting business will be beneficial for all.


    1. Everything RF. (2010, July 10). ISM frequency Bands. Retrieved from Everythingrf:
    2. Idex Biometrics. (2019, July 22). Top 7 Alarming Facts and Statistics on Card Fraund. Retrieved from IDEX:
    3. Phone Arena. (2019, July 19). PhoneArena. Retrieved from