Credit Card NFC Technology: What it is and how it works?

With the move towards digitisation of financial transactions, credit cards are evolving every day. One such evolution is a near-field communication credit card that aims to make payments convenient, quick, and secure.

What is NFC?

Near-field communication, or NFC, is a short-range wireless technology that enables the exchange of data from a certain distance. NFC-enabled devices have a silicon chip that helps to complete transactions. This technology helps in contactless payments through credit cards, debit cards, smartphones, and other devices

What is an NFC credit card?

NFC credit card uses near-field communication to make contactless payments. It tries to make your transactions easy and quick compared to a traditional credit card. It is different from a traditional credit card, where you have to swipe or insert the card to make payments. 

In an NFC transaction, you just have to tap your card on an NFC-enabled device. The short-range technology makes connections from a distance of a few centimetres. You can identify a NFC card by looking for the contactless logo or a wifi symbol.

How does it work?

NFC technology functions through radio-frequency identification technology (RFID) that uses radio waves to exchange information. RFID uses radio waves to identify data and share information. It has two elements; tag and reader. The tag has a microchip and antenna which helps in storing and transmitting data. The reader receives the signal from the tag and emits radio waves.

How to use an NFC credit card?

Step 1: Show your credit card near the NFC terminal when the device signals you to.

Step 2: The NFC terminal will read your credit card information and process the payments.

Step 3: According to the RBI mandate, for transactions above ₹5,000 you will be required to provide a PIN to complete the transaction.

Benefits of NFC credit card

1. Easy to use: Compared to a traditional credit card, NFC cards are easy to use and enable seamless transactions with just a tap. It can even be used by somebody who does not know much about technology.
2. Quicker payments: Since you do not have to swipe or insert your card, NFC cards ensure faster payment processing unlike a traditional card.
3. Secure transactions: All payments made through NFC credit cards are encrypted, with layers of privacy protection. This saves you from fraudulent transactions and theft of data.

Drawbacks of NFC credit card

1. Loss or theft: In case you lose your card or your card is stolen, it is easy to make fraudulent transactions due to convenience. Fraudsters can just tap and make payments on your behalf.
2. Limited accessibility: Since, NFC is one of the latest trends in the credit card landscape, not all sellers or businesses accept payments made through NFC credit cards. Therefore, it cannot be solely used for all your transactions.

In conclusion, like every other innovation in the financial realm, NFC credit cards help to make shopping easy. However, keep in mind the risks associated with such transactions and avoid overspending due to the convenience they offer.