Sometimes on phone reviews I read that a certain model, often one released in a Western market, uses NFC for payment. In my country, mobile payments use QR codes so any phone with a camera can use them. Does NFC have any advantage over such a system?
In North America and Europe, tap to pay was implemented prior to smartphones that could scan QR codes being ubiquitous. Most of us have had cards that support NFC payments for longer than we have had a phone that can read QR codes so it made sense for phones to pick up the technology that worked with the terminals businesses already had than try to implement a new system.
The QR code thing is primarily a Chinese solution to the payment problem (all other Asian countries I’ve been to have widespread NFC acceptance). Payment cards were never widespread within China the way they are in other places, until AliPay and WeChat Pay became a thing people still primarily used cash for their daily communications. If businesses don’t already have credit card terminals but people have smartphones then the QR code starts to make more sense.
One interesting thing about this is that even before North America was widely using NFC payments, people in Hong Kong were using their Octopus transit cards as contactless payment at all kinds of businesses throughout the city. Yet that technology didn’t seems to make it into Mainland China.
Veritasium did a video about credit card payment and NFC payment :
https://www.youtube.com/watch?v=YSJY3DvnybE
I think it’s a good opportunity to understand the capabilities and weakness of NFC.
I personally think QR codes are not very secure as anybody could replace it by a malicious one.
Just to clarify since it barely came up: NFC can be used for a lot of things, digital payment just being one use case. You can also have “tags” that trigger some sort of automation when the phone is placed there (like on the phone holder in your car, on your desk, on your night stand). You can use it as a key to open doors or locks (bikes). You can transfer your contact information to someone by touching phones together. And so much more.
It’s a universal way to communicate (very) short distances, with the unique property that the reading device can provide power to the item being read if needed. Not a lot of power, but no batteries needed at all for the passive side in many cases.
UK/EU has had contactless payments via our bank cards for about 2 decades now. America caught up eventually some years later
When phones got the ability to act as our bank cards, it made sense for them to use something compatible with the same technology that was already deployed
Funnily enough, America (and I guess also Korea, given the companies) dragging their heels on standard contactless is one of the main reasons why Samsung/LG briefly put out a couple of generations of phones that had a magnetic stripe mimicking payment feature in addition to standard NFC (https://en.wikipedia.org/wiki/Magnetic_secure_transmission)
Our gov ID card and medical insurance contains NFC chips which can be used for authenticaing with your legal identity (the old school way is post identidification where the company sends a letter to your adress)
Other types of that can be payment.For ID: I like it.
For payment: IMO the advantages are phone-less payment. I don’t need to have my phone on me whenI can tap my bank card on the terminal.Another example:
Our public transit has a state-wide valid ticket.
The usual way you get the ticket issued is as a qr code with the local transit copany where you live.
I specifically opted for a physical card.
Why? If my phone dies, I don’t have a valid ticket. And if that happens you get get fined for it.
I could send in an objection and get it cleared by providing my ticket later at a service point but why bother? :pTIL not every country uses NFC for contactless payments.
FYI, metadata of any of those payments are routed through Apple or Google systems. Use a physical card (with or without NFC) instead if you don’t want this.
It feels like mostly Asian countries are likely to use QR-code while most western (NA and (West-)Europe) countries are likely to use NFC based.
At least that’s what I observed with Youtube and my limited traveling.The backend is a government system called NPCI. The frontend can be any app that follows the standards laid down by NPCI. This includes Google Pay, Walmart’s Phonepay, SoftBank’s PayTM and NPCI’s own BHIM. Many banks also have their own apps, but most of these are BHIM reskins.
In theory, yes.
In practice, most if not all banks in The Netherlands killed their NFC payment module and suggest the use of Apple/Google services instead. I assume this is the same for most smaller countries and banks.
But isnt the Apple/Google way still using NFC?
The short answer is, NFC only provides a brief packet of data - the details you would see on a physical card then the vendor’s machine takes the money from the customers bank account. Payment with a QR code requires your phone to actually interact with your bank and transfer the money from your account.
The reason why one is more common than another in different locations is historic.
In western countries you’ve been able to pay by card at most retailers for several decades. Originally there was a magnetic strip on the card, then a chip on the card, then the card did NFC. That being the case phones could just emulate cards by doing NFC and you could pay for things with your phone. Vendors didn’t need to do or change anything.
In South East Asia (and elsewhere?) that’s not really the case with many smaller street vendors requiring cash payment until recently. Many people might have cards but they were really only used for identifying yourself at the bank or cash machine. Even in larger cities, smaller food vendors often required cash payment - at least up until covid. That being the case there was never an era where people carried and used bank cards, so QR codes are the alternative tech.
To add on what you said since it was the most complete answer, the first credit cards didn’t start with a magnetic chip but had raised numbering that cashiers would emboss the numbering onto a carbon copy slip. The shop would keep two copies of the receipt and the customer would keep the third.
The switch to magnetic swipe on North America took a while because it required a phone connection to verify the card number. Europe switched to chips earlier than North America in part because a lot is stores didn’t have the required phone/data connections for continuous use, so the chip was developed to be used in cases where there wasn’t any connectivity with the card reader.
That makes sense. I’m in India, and I think most of Asia (except Japan) uses QR.
Do the QR codes work without internet? The NFC payment schemes do.
It can work without internet only for amounts below 2000 rupees, and only if you’ve enabled that option.
How does the phone confirm the payment without a network? With NFC the phone has a low bandwidth connection to the payment terminal that’s enough to sign the transaction.
EDIT: I found it. It uses special phone codes that still use the mobile network to do the payment. If I understand correctly it would still not work in places where there’s no reception, like some large buildings or air planes.
Yes, you need a phone network, but not internet. Also there is a small charge.
Australia has been using tap to pay for around 15 years now, whereas QR codes weren’t in widespread use in the country until COVID. There’s no reason to switch from NFC to QR given practically every bank’s app natively supports NFC payments now (no need to use a third-party wallet if you don’t want to)
The US is a different story… It took a looooong time for NFC payments to be adopted. I’m an Aussie living in the USA, and some of the US banks I use didn’t support contactless payments until a few years ago!
It’s faster than a transaction via QR code. Also, the chip isn’t just restricted to handling payments. It can be used as key fob for your car or on your smart lock at home or at the hotel you’re staying at.
My car uses UWB (BMW Digital Key Plus) to automatically unlock when I’m walking towards it, once I’m pretty close. Maybe 1 meter (3 feet) from the car, in any direction. It has NFC as a fallback too - if the UWB thing fails for some reason, I can tap the phone to the door to unlock it too.
Let’s you make bootleg Nintendo amiibos.
Really easy.
Like stupid easy.
The difference is, phone companies and card providers between them can more easily lock down and restrict who has access to NFC compatible apps. There are no rogue payment apps popping up to challenge the status quo.
So they see more use in richer countries
Is faster to tap the phone than to use read a qr.
I would not want to have to open the camera every time I got on the bus, for example.
We have a mixed system here, as contactless pay with cards and the local solution using QR Codes came at a similar time, but local banks did block apple pay and other phone solutions (you had to order a credit card from services like boon to use apple pay). Small events or business like shops on farms have just the QRcode, no terminal.
Later, banks allowed apple pay directly and the terminals got an update to show QRcodes. And the local solution allows bank to bank payments in seconds without fees.
These facts and the case that internet connection is pretty good anywhere here, has let, that most people have the local solution and at least a NFC debit card. And since debit cards now can be added to apple pay, many have this too.
Sadly I know no statistics how well the local solution can hold against the nfc payments
What I know is, that nearly zero people pay with cash anymore
Interesting. But why would people get a card if you already have the QR system? Isn’t it more expensive?
Well, you get such cards free if you have an account at a bank
