Near Field Communication (NFC) represents a big step in the evolution of mobile payment. The financial and credit industry in particular has been introducing new NFC products to the market for quite some time now. They are based on a transmission standard, which is used for communication within ten centimetres. As opposed to technologies like Bluetooth, NFC requires no user entry for data exchange because simple proximity to another NFC receiver is seen as user confirmation. The technology is already integrated in many mobile phones. Other phones can simply be upgraded by attaching an NFC sticker to the back. Credit cards, bank cards and customer cards can also include this feature. Cards equipped with NFC include an RFID chip, which actively communicates on an ongoing basis using a small antennae integrated in the card. As soon as a receiver is within range, it can access the transmitted information.
The payment procedure using NFC is uncomplicated. The bank card or mobile phone is held just a few centimetres from the terminal while the salesperson enters an amount and initiates payment. A visual and acoustic signal indicates that money has been transferred. Smaller amounts are transferred without requiring PIN entry. Generally the upper limit of the payment providers is between 20 and 25 euro. This serves to limit the possible damage, which could be caused by misuse.
Actual payment of the amount differs according to the provider. Money is either added to the so-called eWallet in prepaid amounts or the amount is debited to the holder’s bank account or credit card. Prepayment to add money to the eWallet can usually be carried out by bank transfer, at an ATM or via credit card.
In order to accept payment in this way, retailers require a special NFC terminal as well as provider contracts. The MasterCard/Maestro PayPass procedure and mpass have the greatest market penetration in Germany. This is not least due to the partnerships with the three major German mobile phone network operators o2, Telecom and Vodafone, who are striving to make NFC sticker retrofitting attractive to their customers. These offerings are followed by Visa (payWave) and Girogo, a German credit industry project which the association of savings institutes is trying to establish on the market. Every bank card issued by one of the participating savings banks is now equipped with the Girogo feature and the eWallet can be refilled right in stores.