A Review of Technical Approaches to Realizing Near-Field Communication Mobile Payments

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Mobile phones that support near- eld communication
(NFC)a contactless, low-power
technology that lets devices communicate over distances
on the order of a few centimeterscan act like
a smart card when presented to a contactless terminal
in so-called card emulation mode. One of this mode’s
main use cases is payments at the point of sale (POS),
an increasingly important ability in light of mobile
phones’ central role, ubiquity, and connectivity capabilities.
Yet, despite these advantages and the fact that
the core NFC technology has been available for several
years, there’s still no global established pay-with-yourphone
mechanism. In part, this is due to the complexity
of the NFC ecosystem, which includes a wide
variety of banks, mobile network operators (MNOs),
phone manufacturers, and other stakeholders who
o en have competing interests in the recurring revenue
generated from payment transactions. Traditionally,
nancial institutions and payment networks shared
the per-transaction commission, but with phone payments
becoming increasingly popular, commissions
must be shared among more entities, which is clearly
unappealing to established stakeholders.
So far, no single POS mobile payment scheme has
risen to dominance, in spite of multiple a empts backed
by powerful players. Some have disappeared without
ever gaining a foothold, while others have evolved by
dropping, adapting, and mixing speci c technologies.
So cardinitially known as Isis Mobile Walletwas
one such scheme backed in the US by AT&T, T-Mobile,
and Verizon; it eventually shut down in March 2015
without much fanfare. Google Wallet (www.google
.com/wallet) launched several years ago for in-store use
but nowadays seems to be limited to sending money
within the US. Presently, Apple Pay (www.apple.com
/apple-pay), Android Pay (www.android.com/pay),
and Samsung Pay (www.samsung.com/us/samsung
-pay) are the most prevalent schemes. LG Pay was discretely
announced a few months ago but remains to
be launched. At present, all these schemes have limitations
in terms of supported countries, merchants, and
cards. is situation is expected to improve with time; however, given this dynamic and fragmented landscape,
instead of focusing on a particular payment scheme, I
aim to address the fundamentals of how they work from
a technical standpoint.