NFC and payments with a phone
Why are people so obsessed with the NFC buzzword?
The only safe and understandable way to conduct the payment with a phone is with the protocol like this:
1. Shop sends a payment request to your bank (via shop’s bank or directly)
2. You bank pings your phone and waits for confirmation.
3. You take your phone out and confirm the payment. You can do this securely over Wi-Fi, 3G, EDGE, Bluetooth, NFC and any other communication technology which lets you to speak TCP/IP and finally (after going through all the proxies and routers) connect to the Internet.
4. When bank gets the confirmation, it acknowledges the transaction and tells the shop about it.
5. Shop issues a ticket and you walk away.
This protocol is safe (contrary to modern credit card processing) because you never trust someone else’s device (you trust only your phone) and you never give away any secret information (like credit card number or a PIN code).
The only tricky thing here is how to give the shop your banking ID (which can be a phone number), so they can send it to your bank which will contact you for confirmation. This can be done in many different ways:
0. Tell the ID to the shop assistant - simple to understand, but needs remembering and typing in. Since we need a phone to confirm payment anyway, we don’t even count it.
1. Show the barcode on the phone’s screen and scan it. You need to launch a payment app anyway. Why not to display you bank ID as a barcode on the first screen so you can simply scan it.
2. Use NFC to announce your ID to the shop. This like barcode scanning, but without optical scanning. It has its issues, though. If you have many devices nearby, the receiver may confuse your device with someone else’s, or recognize your slower. Everybody knows how slow bluetooth is.
3. Do it in reverse with NFC: the shop will publish you bill and (if you are lucky) only your phone will see it, so you can send it to your bank.
To me, the most usable ways to conduct payments are #1 and #2. And #1 seems to be simpler and faster (but feels “lo-tech”).
Bottom line is: NFC is not a requirement for payments with a phone. You need any communications tech to connect to your bank and can use different ways to announce your banking ID.
I also hope, that the phone payments won’t be done in the same way as credit card processing is done. That is, by giving away secret codes and trusting the shop to confirm the transaction.