Definition
NFC payments are contactless transactions made using Near Field Communication (NFC) technology, which allows two devices to exchange data wirelessly when held within a few centimetres of each other. When a customer taps a contactless card, smartphone, or wearable against a payment terminal, NFC transmits the payment data and the transaction is processed without physical contact or card insertion.
How NFC Payment Technology Works
The NFC chip in a contactless card or mobile device stores encrypted payment information. When it comes within range of a compatible reader (typically 4 centimetres), the chip is activated by the reader’s electromagnetic field and transmits the payment token needed to complete the transaction. The process takes a fraction of a second.
NFC Payments in Australia
In Australia, contactless payments have become the dominant payment method at the physical point of sale. The Reserve Bank of Australia has reported that tap-and-go transactions account for the majority of in-person card payments, a proportion that accelerated significantly during the COVID-19 pandemic when contactless transactions were preferred for hygiene reasons.
Digital Wallets and NFC Security
Apple Pay, Google Pay, and Samsung Pay are the main digital wallet platforms in Australia that use NFC to enable payments via smartphone and smartwatch. These platforms add a layer of security by tokenising the card number, meaning the actual card details are never transmitted to the merchant terminal during the transaction.
NFC Transaction Limits and Merchant Requirements
Transaction limits for NFC payments exist in most markets. In Australia, contactless transactions above $100 typically require PIN entry. From a merchant perspective, accepting NFC payments requires a terminal that supports contactless functionality. Most modern EFTPOS terminals in Australia are NFC-capable and PCI DSS compliant.