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NFC Forum Releases Payment Spec as Alternative to QR Codes in China

Association members are now reviewing the NFC Money Transfer Candidate Specification before it is released for use by financial service providers to enable NFC payments with phones at Chinese merchants.
By Claire Swedberg
Mar 05, 2019

The NFC Forum has released a new money-transfer specification candidate for Near Field Communication (NFC) technology. According to the industry organization, the new spec is intended to enable the kinds of contactless-payment solutions now being offered in China and Japan via QR codes.

The NFC Money Transfer Candidate Specification (NMT) will enable financial service providers to create NFC-based applications for money transfers that can be conducted by tapping an NFC-enabled mobile phone against a reader or another smartphone. The system offers an alternative to the QR code-based payment method that has grown in popularity in China, says Paula Hunter, an executive director at the NFC Forum. The association has been developing specifications to ensure interoperability between devices and among services since 2004.

The NMT spec will allow financial service providers to create apps for money transfers, to be conducted with the tap of an NFC-enabled smartphone.
While NFC payments through systems such as Apple Pay and Google Pay are common throughout North America and Europe, they have not received as much traction in China, in part because fewer Chinese consumers had NFC-enabled devices in hand as the technology was being adopted several years ago. Additionally, payment systems using NFC in Europe and North American typically employ a separate chip in a smartphone—the secure element (SE)—to relay authorization to an NFC reader before a transaction can be completed. Many of the phones currently in use in China lack the SE chip.

Payment service providers such as WePay and AliPay filled the gap in that part of Asia with QR code scanning-based apps. Consumers can use these contactless payments at convenience stores and other locations to make fast, low-value purchases. Users can download the payment app, provide payment information that can be loaded onto their phone, and subsequently hold the phone over a merchant's point-of-sale (POS) terminal when purchasing products. The terminal's camera scans a QR code on the phone, thereby authorizing the transaction. An alternative approach involves having the phone's camera scan a QR code at the POS terminal in order to accomplish the sales transaction.

Recently, NFC Forum members that sell products in China have expressed an interest in a specification that could enable NFC payments as an alternative to QR codes in that nation. "This really came to us from some member companies that were looking at what was happening with China and Japan with people communicating with QR codes to make payments," Hunter states, "and they thought 'Why can't we take advantage of NFC technology to transmit the same information, and more securely?'"

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