Near Field Communication: Pros and Cons

The advantages and disadvantages of NFC payment

Customer making NFC payment

 Luis Alvarez / Getty Images

NFC, or Near Field Communication, is a communications protocol for electronic devices. It is most commonly used to support mobile payments systems like Apple Pay, Google Pay, and Samsung Pay. It is also used to share media between nearby devices, create access tokens and keycards, and bootstrap wireless connections.

In this guide, we take a look at the pros and cons of NFC as a contactless or mobile payment portal.

What We Like
  • Convenient—easy to make payments without a wallet or credit card.

  • Versatile—works with more than just payment systems.

  • Seamless communication between devices.

  • NFC payments are generally more secure than credit cards.

What We Don't Like
  • Can be pricey when deployed for large-scale operations.

  • Not completely free of security risks, despite improved security over traditional payment methods.

Advantages of NFC

NFC makes it easy for users to make instant payments with their smartphone or tablet. You can use a mobile wallet, like those offered by Google or Apple, to process a transaction with just a few taps—no need to even open your wallet.

It's also a highly versatile platform, in that it covers a range of services and industries. As a payment platform, NFC can be used for mobile banking, restaurant reservations, booking train or movie tickets, delivering real-time updates on expenditure and rewards points, redeeming rewards and coupons and more.

This system is beneficial for enterprises as well, as it presents a dynamic and forward-thinking mindset. Customers are better served through convenient, hassle-free technologies, which in turn improves brand reputation and increases productivity.

NFC's advanced encryption allows institutions to use it to screen or admit student or employee IDs. In some cases, the IDs can also be used to interact with objects in an office environment, sharing real-time information with other users or devices.

Using mobile wallets is, to an extent, safer than using physical credit cards. In the unfortunate event of theft of the mobile device, the user’s credit card information is password- and PIN-protected. This adds an additional layer of safety. NFC-enabled payment cards are built to be more secure than the magnetic strip of a regular credit card. While using this system, retailers would have no physical access to customers’ credit card information.

Disadvantages of NFC

NFC technology may be too expensive for some companies, as it usually involves a suite of related devices, equipment, and upgrade-dependent standards. While large retailers such as Starbucks have successfully incorporated the technology, smaller companies may find it too pricey and difficult to adopt. The cost of installing the hardware and software and hiring technicians to maintain it can compound quickly.

While NFC transactions are undoubtedly more secure than regular credit card payments, this technology is not completely free of risk. Mobile hackers have developed ingenious ways of gaining unauthorized access to personal financial data stored on phones, and the fight to secure that data is always ongoing.