Context: Recently, Google Pay has launched a new feature in India, ‘Tap to pay for UPI’, in collaboration with Pine Labs.
Background

• Near field communication (NFC) technology had initially started in consumer electronics companies like Nokia, Philips and Sony in 2004.
• They together formed the NFC forum, which outlined the architecture for NFC technology to create powerful new consumer-driven products.

What is NFC and how does it work?

• NFC is a short-range wireless connectivity technology that allows NFC-enabled devices to communicate with each other and transfer information quickly and easily with a single touch — whether to pay bills, exchange business cards, download coupons, or share a document.
• NFC transmits data through electromagnetic radio ?elds, to enable communication between two devices.
• Both devices must contain NFC chips, as transactions take place within a very short distance.
• NFC-enabled devices must be either physically touching or within a few centimetres from each other for data transfer to occur.

What are the other applications of NFC technology?

• NFC tech has a wide range of applications besides driving payment services like Google Wallet and Apple Pay.
• It is used in contactless banking cards to perform money transactions or to generate contact-less tickets for public transport.
• Contactless cards and readers use NFC in several applications from securing networks and buildings to monitoring inventory and sales, preventing auto theft, keeping tabs on library books, and running unmanned toll booths, according to investopedia.
• It also has an application in healthcare, to monitor patient stats through NFC-enabled wristbands.
• NFC is used in wireless charging too.

How safe is this technology?

• NFC technology is designed for an operation between devices within a few centimetres from each other.
• This makes it di?cult for attackers to record the communication between the devices compared to other wireless technologies which have a working distance of several metres.
• The security level of the NFC communication is by default higher compared to other wireless communication protocols.

Impacts on India
NFC technology is one of the most secure payment options nowadays

• Experts consider it to be even safer than traditional swiped transactions. Although services like Apple Pay or Android Pay do everything to protect your operations, you can secure them even more.
• The technology works automatically to make contactless services like Apple Pay, or Android Pay possible.

Fast modes of payment and towards Digital India

• Digital India is a flagship programme of the Government of India with a vision to transform India into a digitally empowered society and knowledge economy.
• E-governance initiatives in India took a broader dimension in the mid-1990s for wider sectoral applications with emphasis on citizen-centric services.
• This technology will make this initiative stronger and digital payment more reliable for the users.

Reduction of fraudulent and crime

• NFC technologies will reduce fraudulent related to digital payment transactions and make the data more stringent to corrupt.
• Crime related to real time location can be reduced, as the information in the NFC is dynamic.

Benefits of NFC

• It provides more security compare to magnetic strip-based debit and credit cards. It also uses PIN.
• It does not require search and pair procedure like Bluetooth and other methods to establish connectivity.
• No special software is needed. Moreover, it does not require manual configurations and settings.

Cons of NFC

• It can only work in shorter distances around 10-20 cm.
• It is very expensive for the companies to adopt the NFC enabled devices.
• It is not advantageous for users due to complex procedures compare to other easy options.
• Though it is more secure compare to credit/debit card-based system, it is not completely risk free.
• This is due to the fact that mobile based hacking is common now-a-days due to availability of advanced tools and techniques.
• The power consumption is comparatively more in NFC enabled devices.