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How NFC Technology Is Changing Banking and Financial Software

iStock 1155013233 e1658325029185 - Global Banking | Finance


NFC mobile application development

Transactions using smart cards, smartwatches, and smartphones are becoming commonplace. Allied Market Research predicts the contactless payment market will grow nearly fivefold, from $1,168 billion in 2019 to $5,424 billion by 2027. The driving force behind the process is near-field communication (NFC). What is this innovation? What can benefit banking and financial software development?

What is NFC technology?

NFC is a short-range wireless technology. It links two devices that are placed close to each other. A special chip is embedded in an active device (a smartphone, watch, or other wearable equipment). Passive equipment (for example, a POS terminal) has a tag for reading information. Transactions, file transfers, and information exchanges occur through the built-in chip.

NFC is used for:

  • Reading NFC tags. It helps customers to scan information about goods, check electronic boarding passes at the airport, open doors, or pay for travel;
  • Emulation of bank cards to pay for goods. Personal financial information is not stored in the phone memory, but on a chip. It encrypts data, manages the authentication process, and initiates transactions.
  • Wireless charging of such small IoT devices as fitness trackers or smart watches. NFC transmits power up to 1W.
  • Peer-to-peer services. It connects smartphones, computers, and tablets to exchange information (contacts, settings from a wi-fi router, etc.).

Unlike Bluetooth, NFC does not need to be manually configured. You needn’t search for an object to transfer data. The technology automatically pairs devices when they are both turned on and are at a distance of 4 inches. The connection takes 0.1 seconds, which makes NFC one of the most convenient payment methods.

NFC usage statistics 

NFC transactions have gained popularity. In 2015, the volume of the global technology market was estimated at $4.6 billion, and by 2024 it will grow 10 times – up to $47.3 billion.

ABI Research has estimated that 1.6 billion NFC-enabled devices will appear on the market by 2024.

The same study found that around 40% of survey participants used contactless payments before COVID-19. The pandemic has spurred more demand for contactless devices and innovation.

In the US alone, the share of such payments has increased by 150% since March 2019. 75% of people pay for goods and services using NFC, and 96% also use the technology for other purposes: paying for trips in public transport, digital identification, or opening a car.

These figures show that financial institutions and banks should not ignore NFC technology. Perhaps this is the feature that will make mobile banking software popular.

NFC application development for banking

NFC improves banking programs in the following ways:

  1. Contactless transactions.

Fintech uses NFC for contactless payments, implementing it in mobile apps. Users can pay with their smartphones or smartwatches without touching a POS terminal. It is enough to bring the device to the reader at a distance of 4 inches, and the required amount is withdrawn from the client’s bank account. To do this, you do not have to use a camera, or a scanner to read a QR code.

  1. Increasing customer loyalty.

An NFC banking app makes visiting a branch more comfortable and faster. A bank branch can place a tag with information at the entrance so that the visitor automatically registers and indicates through the program which service they need. They receive an electronic coupon with the name of an employee and the estimated waiting time.

It is more convenient to plan visits to the bank. A client can make an appointment with a consultant to obtain a loan. They see the schedule of employees and choose the right time. All they have to do is come to the department at the appointed time and touch the NFC tag located in it.

  1. Identity verification.

With the help of an NFC app, a client can transfer personal information and passport data to the computer of a bank employee. Embedded chips store information such as last name, date of birth, address, and biometric information. The data in the chip cannot be faked, so fraudsters will not be able to get a loan instead of someone else or withdraw money from someone’s account.

  1. NFC wallet 

It is possible that in the future the world banking systems will work with cryptocurrency. And owners of digital money will be able to use it through mobile banking. They will send and receive money and pay for goods.

Benefits of NFC application development

With the help of an NFC mobile app, a user can pay with a phone instead of a bank card. Such a program provides users with:

  • Convenience and speed.

You needn’t carry a wallet in your bag and waste time looking for it. A card is linked to a banking app. The owner needs to unlock their phone, take it to the terminal and get their goods. You do not need to sign in to confirm a payment. You can pay for goods, even if there is no Internet connection. The main thing is to enable the NFC module.

  • Enhanced security.

The data transmitted by the chip to the reader is encrypted with the help of tokens. Tokens change with each transaction, so it is almost impossible to recognize them. Moreover, an additional level of security is provided: a limit on the amount for payment without a pin code is set. If the smartphone owner needs a large sum, they must confirm the transaction by entering their pin code.

An NFC digital wallet is safer because credit card information on a smartphone is protected by a password or biometric information. A contactless card contains the owner’s information, and it is easier for an attacker to gain access to the funds.

  • Availability for all mobile devices.

You can make NFC transactions using Android phones (from version 4.4) and iPhones (from version 6/6 Plus) in stores that support contactless payments. This technology has almost no effect on energy consumption. Only 40 mA is needed for a single reading of a tag. In sleep mode, NFC consumes 3-5 mA per hour – less than 0.001% of battery charge per day. You do not need to turn off the module: it is activated automatically upon payment and does not drain the telephone battery in any way.

How to implement NFC functions in a banking app?

To successfully implement NFC technology in a banking mobile app, it is important to work with a reliable NFC software development company. You need to:

  • Find an IT outsourcing company with experience in fintech.
  • Make sure that the IT service provider has the necessary specialists and technology stack for an NFC project.
  • Share your idea of how NFC will benefit the bank with contractors.
  • Decide on the size of the team that will develop the mobile banking app.
  • Discuss the features that the future software will include and the amount of work waiting to be done.
  • Establish a budget for the development of banking and financial software, its integration, and subsequent technical support.
  • Agree with the NFC development company upon the deadline of the release of the program to the market.

Usually, all these issues are discussed with representatives of the contractor during the discovery phase. This is an important introductory stage that will help you decide whether to continue working with the service provider.


NFC improves the work of banking organizations. It reliably protects contactless payments and personal data and speeds up identity verification and loan processing procedures. Consumers love the convenience this technology offers and fast and secure transactions. In the future, NFC may become the key to the competitiveness of financial institutions.

Global Banking & Finance Review


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