What Are NFC Tags? A Beginner's Guide

What Are NFC Tags?

Near-field communication technology allows two devices to communicate wirelessly. The technology can be embedded in a small tag to facilitate data transfer between nearby mobile phones, laptops, tablets, and other electronics. NFC tags are often compared to RFID, but the two are different.

What is RIFD?

The RIFD technology (radio-frequency identification) is the predecessor of NFC. RFID tags are most commonly known from anti-theft systems attached to the more expensive products in stores. RIFD has been successfuly used to track inventory in a variety of sectors and industries, e.g., manufacturing, healthcare, automotive, or apparel — wherever there's a need to track items.

What is NFC?

NFC is part RFID (radio-frequency identification) and part Bluetooth. Unlike RFID, NFC tags work in close proximity, giving users more precision. NFC also doesn’t require manual device discovery and synchronization as Bluetooth Low Energy does. The biggest difference between RFID and NFC is the communication method.

RFID tags have only a one-way communication method, meaning an RFID-enabled item sends a signal to an RFID reader.

NFC devices have a one- and two-way communication capability, which gives the NFC technology an upper hand in use cases where transactions are dependent on data from two devices (e.g., card payments). Mobile wallets like Apple Pay, Samsung Pay, Android Pay, and other contactless payment solutions are all powered by the NFC technology.

So in essence, RFID tags are great for inventory tracking and NFC tags work well for enhanced communication.

How NFC Tags Became Popular?

NFC has been on the technology scene for years — Nokia launched the first NFC-enabled phone in 2006. But this technology only gained momentum in recent years.

NFC popularity soared when companies recognized NFC as a enabler of a contactless future.

Contactless payments registered a 150% increase between March 2019 and June 2020 in the US alone, partially caused by the pandemic. Contactless tech, originally designed to handle small purchases, is now one of the most popular mobile payment methods.

Today, there are more than 2 billion NFC-enabled devices and 20% of the world’s population has access to NFC.

But what is an NFC tag? How does NFC work? What are the advantages of using NFC? Are NFC payments secure? How are businesses using NFC technology?

Let’s look at all these questions and explore some common applications for NFC tech.

How Do NFC Tags Work?

NFC tags work like any other RFID tag to communicate over radio waves. Two devices — the NFC tag and the NFC reader exchange information in NFC data exchange format.

An NFC tag sends radio waves to activate the antenna in a receiving device. The recipient validates the information to complete information exchange.

The technology works over a very short distance — approximately 4 inches. NFC tags work without a battery and draw power from another device, e.g., a smartphone.

An NFC reader connects to only one NFC tag at a time, minimizing accidental transactions. During NFC payments, encrypted data exchange happens between NFC chips. Card details can be stored on a smartphone, which then acts like a traditional card. Users can pay without carrying multiple cards in their wallets — all cards can be stored on the smartphone.

Business Benefits of Using NFC

Instant connection

NFC devices connect instantly for data exchange when brought close together. The small range of NFC chips makes this technology useful for payments, identification, access control, ticketing, or any other application requiring near-field data exchange.

Wireless exchange

All modern smartphones have NFC modules that connect wirelessly and without an external power source. NFC chips are passive devices that are powered by a device that reads them at the moment (this happens through magnetic induction).

Secure, standardized, and regulated technology

NFC data exchange occurs only between devices in close proximity. Nearby connection limited to one device protects the transaction from remote jacking by a hacker.  

NFC connections are regulated by standard protocols like ISO/IEC 14443 A, ISO/IEC 14443 B, and JIS X6319-4. ECMA International, ETSI, and other authorities make sure that NFC is universally secure and accessible across device vendors. 

No need for network connectivity 

NFC tags can work without WiFi, 4G, 5G, or LTE connectivity. This means users can pay, transfer data, access areas, and use NFC-enabled services even while they’re disconnected from the internet. 

For example, retail outlets and small businesses use NFC-enabled POS systems to process payments. Hotels use NFC keycards that work even in locations with a weak WiFi signal. Customers can use all the services without worrying about mobile data charges or signal unavailability. 

Convenient and affordable technology 

NFC tags are an easy and affordable technology that can help in digital transformation — contactless payments, access control, and identification can significantly improve customer and employee experience in their daily activities.

For example, you can use NFC to enable contactless access to your gym, health center, or office. Users can download your custom mobile app to pay for their membership and then use the smartphone to access the facility. In the post-COVID world, NFCs with digital tokens help any customer-facing business remain contactless. 

Reduced carbon footprint

NFC is an eco-friendly solution that can minimize the carbon footprint of any business. Recyclable NFC tags made using paper reduce the use of plastic for access cards.

How Businesses Are Using NFC Tags?

NFC offers many opportunities for companies that want to digitize experiences or facilitate access. Businesses all over the globe are using NFC for several use cases and applications.

Below are just a few.

Contactless payments

Contactless payments are the most prominent use case for NFC technology. NFC makes transactions easy, secure, and fast — features coveted by consumers and businesses.

NFC-enabled devices have fueled the contactless payment revolution, especially post-COVID.

Consumers don’t need to input anything extra (PIN or signatures) for small transactions. Plus, NFC is a more secure way to pay — transactions happen instantly and users don't have to hand over their card with sensitive information on it.

Google Pay is a prominent example of a contactless payment solution based on NFC. The app powers contactless payments to millions of consumers globally via their smartphones.

Ticketing

An NFC-enabled smartphone can be used as a ticket for concerts, movie shows, or even transit. Many businesses, operators, and even public transportation services have added NFC technology to their ticketing operations.

For example, WMATA, the government agency that controls public transport in Washington, upgraded how commuters can use their SmarTrip cards. Now commuters can upload their card into their Apple Wallet and simply use their iPhone or Apple Watch to pay the fare.

NFC-enabled devices work by generating digital access tokens that people use to get on a bus or metro without needing to top up their SmarTrip cards. Payments will be made automatically using Apple Pay or Google Pay.

Identification and access control

NFC can be used to identify team members and people who access select areas or floors. People can use their smartphones to open doors at the office — no separate access card necessary for identification and access control.

UPDATE, June 2022

Product status and maintenance

NXP, a manufacturer of semiconductors, has announced the launch of a new line of NFC-integrated circuits. The circuits provide a tamper-detection and condition-monitoring feature, which opens the doors to a host of new use cases for NFC tags.

For example, the NFC circuits can be included in anti-tampering systems to enable the detection of tampering incidents on sealed products. When the cap is tampered with, the tag sends a signal to the chip’s memory, recording the breaking of the seal. The customer can later view the information via a smartphone by scanning the product.

Another type of NXP-made circuits comes with a condition-monitoring features that can detect moisture or fill level in bottles and containers. To see a product’s fill level, you simply scan the tag with your phone.

UPDATE, April 2023

Checkpoint and player tracking in sports events

NFC technology has the potential to revolutionize the way we approach orienteering, a sport that is still heavily reliant on expensive tracking and navigation systems. Many participants in event across the world still rely on a pen-and-paper method to mark checkpoints and landmarks, which can be inefficient and problematic for referees to verify during events (especially multi-part events).

A mobile app with NFC tags and an automated verification system could greatly improve the checkpoint verification process. Participants could use their smartphones to tap NFC tags placed at each checkpoint, which would automatically record their progress and ensure accurate results. This would not only streamline the orienteering process but also provide a more accessible and affordable option for athletes and event organizers.

Trail completion and summit confirmation

NFC tags and companion mobile applications can be used to create a verifiable repository of completed trails and summits. Checking in at historical locations or scenic paths and mountaintops, could be a motivational incentive for younger generations with personalized digital collections that can be shared with others.

FAQs 

How close do you have to be for NFC to work?

NFC works effectively within a 4-inch radius. Devices must be within this range for NFC to work. Such close proximity makes NFC safer and more secure than other similar technologies for contactless payments.  

Which is better: RFID or NFC?

NFC is an evolution from the RFID technology and both have distinct use cases. NFC offers a two-way communication channel while RFID offers one-way communication. NFC devices can act as readers and tags while RFID needs readers and tags separately. NFC and RFID can’t be directly compared because both have different applications. For example, NFC is widely popular for contactless payments and RFID is more suitable for asset tracking.

How can I increase the NFC range?

NFC is meant for communication with nearby devices. You cannot increase the range of NFC tags. There are other technologies that have bigger ranges (e.g., Bluetooth Low Energy, RIFD, or ultra-wide band).

Are NFC payments secure?

Yes. NFC payments are more secure than paying via other mediums. Tokenization and encryption protect you from unauthorized payments and access.

What are the benefits of NFC payments?

NFC payments are easy and quick. You don’t need to carry a card or wallet to buy anything — you can use an NFC-enabled smartwatch, for example. Plus, NFC works with existing infrastructure, so there's no need to invest in costly POS (point-of-sale) system upgrades.

For the last ten years, NFC has been a dormant technology with low adoption. But the rising interest in contactless solutions have brought NFC into the spotlight. A secure contactless solution, NFC is a good fit for various use cases.