NFC Guide: All You Need to Know About Near Field Communication

Have you ever wondered what makes services like Apple Pay work? Square’s NFC Guide explains everything you need to know about Near Field Communication.

What is NFC?

Near Field Communication (NFC) is the short-range wireless technology that powers contactless card and mobile payments. Every time a contactless credit or debit card is tapped against a reader, or a payment application like Apple Pay is used, we see NFC technology in action. While it is principally used for contactless payments, NFC can also be used for wireless device charging.

NFC has become extremely popular among UK consumers due to its ability to facilitate secure and near-instant card transactions that would previously have used chip & PIN or signature authentication. The advent of NFC-driven mobile payments technology allows consumers to make payments using their credit and debit card data from digital wallets, even if they do not have their physical cards. As such, the global NFC market was valued at nearly $21.1 billion USD in 2022 with a predicted increase to around $33.1 billion by 2030.

How does NFC work?

NFC (near field communication) is what enables two devices to communicate wirelessly when they’re close together. NFC is actually a subset of something called RFID (radio-frequency identification), a technology that allows us to identify things through radio waves. RFID is nothing new—it’s been used for decades for things like scanning items in supermarkets and luggage on baggage claims and tagging cattle.

NFC, which was introduced in the early 2000s, uses a specific RFID frequency (13.56MHz, to be exact) for close-range communications. To date, one of the more common uses for NFC is identification cards to gain access to places like office buildings and private garages. But increasingly, NFC is being used to power something called “contactless” payments.

If you’ve stood in line at Boots, Starbucks or Superdrug recently, you’ve probably already seen a contactless payment in action. A contactless payment is a transaction that requires no physical contact between a device (aka a smartphone) and a payments terminal. Meaning, people can just hold up their mobile devices to pay.

Is NFC secure?

The idea of paying through a mobile device can make some people uneasy, especially because we’re so accustomed to keeping our wallets close to the vest (so to speak). But NFC payments are extremely secure.

As opposed to the data on a card (which is static—it’s all right there on the back of your card), the data involved in an NFC transaction is encrypted and dynamic, meaning it’s constantly changing.

As an example, let’s take Apple Pay, which uses a technology called tokenization to safeguard bank details.

Here’s how it works: After you take a picture of your credit card and load it into your iPhone, Apple sends the details to your card’s issuing bank or network. The banks and networks then replace your bank details with a series of randomly generated numbers (the token). That random number is sent back to Apple, which then programs it into your phone. This means that the account details on your phone can’t be cloned into anything valuable to fraudsters.

What’s more, Apple Pay is protected by Face ID, Apple’s facial recognition technology. This ensures that only a device’s owner, or another individual authorised by them, can authenticate purchases or sign into e-commerce apps.

This ensures that even if your device is stolen, no one would be able to access your payment data as the device can only be unlocked by a face it recognises. Face ID matches faces against depth information, meaning that it cannot be deceived by a photo or digital image of the user. Touch ID, Apple’s previous user authentication, had a 1 in 50,000 chance of being hacked. Face ID reduces that risk exponentially to 1 in 1 million.

EMV and NFC: what’s the difference?

You may hear EMV and NFC lumped together in discussions. That’s because they both represent the next wave of more secure, authenticated payments (since they’re both encrypted to protect against counterfeiting). However, EMV and NFC are different technologies.

Near field communication (NFC) is associated with mobile contactless payments like Apple Pay. EMV® — developed and managed by American Express, Discover, JCB, Mastercard, UnionPay, and Visa — is associated with chip and PIN card payments.
It isn’t a matter of one or the other, though, so long as your business is equipped with a suitable POS and reader you can take all payment methods your customers wish to use.

Why should I accept NFC?

NFC-enabled payments are the future for three key reasons: they’re secure, fast, and convenient. Let’s dive a little deeper.

More secure

Mobile wallets like Apple Pay tokenize your bank details, meaning they scramble them up into something that’s unintelligible (and thus unusable) for fraudsters. What’s more, these tokens change every time an NFC transaction goes down—so the data is near impossible to isolate and extract. NFC payments like Apple Pay are also locked down by the fingerprint technology built into the iPhone (you initiate an Apple Pay payment with Touch ID). Fraudsters may be tricky, but they can’t replicate your fingerprint.


Most people in the UK now have chip and PIN cards as standard. Which is a good thing, because they’re a lot more secure than magnetic-stripe cards. But what many people don’t realise about chip cards is that EMV transactions are actually pretty slow to process. What’s happening during an EMV transaction is that the chip in the card is talking with the processor to make sure everything checks out - great for security, but time-consuming for you and your queue of customers.

NFC transactions are much faster than EMV transactions—they take just seconds. And as people have started to realise that contactless is the faster, easier alternative to chip and PIN cards, they’ve adopted the contactless way of life.
The speed of NFC transactions is a huge plus for businesses. After all, fast transactions mean more sales.

More convenient

We’re getting used to doing everything on our phones. It’s to the point where some people feel naked without them. The fact that more and more people now have their phones at the ready makes NFC-enabled contactless payments the most convenient way to pay. No more fishing for wallets or fumbling with cash.

How do you pay with NFC?

As a business owner, it’s worth familiarising yourself with how to pay with NFC as a customer. For one, it’s always a good idea to be up to speed on where the payments industry is headed. And second, it’ll help you troubleshoot any issues your customers might have when they go to pay with their devices. Getting yourself set up to pay via your phone is relatively easy. Most mobile wallets use your phone’s camera to read the numbers on your credit card (which, as we mentioned above, become encrypted).

How do you accept NFC?

To accept NFC mobile payments at your business, you’ll need to get set up with an NFC-enabled reader. But this doesn’t have to cost you an arm and a leg. The Square Reader accepts both EMV and NFC payments and costs just £19.

Five Frequently Asked Questions About NFC

What is NFC?

NFC (near field communication) is the technology that allows two devices—like your phone and a payments terminal—to talk to each other when they’re close together. NFC is the technology that enables contactless payments.

What are some examples of NFC mobile payments?

The buzziest are Apple Pay, Android Pay, Google Pay and Samsung Pay.

How do I accept NFC?

You’ll need to get a new NFC-enabled payments reader or card machine that can accept contactless payments. The Square Reader and the Square Terminal accept contactless, mobile and chip and PIN payments.

Are NFC point-of-sale systems expensive?

Not necessarily. Square Reader is just £19 + VAT.

Is NFC secure?

NFC mobile payments are dynamically encrypted, making them one of the most secure ways to pay.