EMV and NFC: Complementary Technologies that Deliver Secure Payments and Value-Added Functionality

Publication Date: October 2012

EMV® (Europay, MasterCard®, Visa®) is a global standard for secure and convenient payment using bank cards and the EMV payments infrastructure. EMV provides protection against the use of counterfeit, lost, or stolen cards for payment and against skimming. Issuers, merchants, consumers, and acquirers/processors all benefit from EMV.

The United States is the last market to migrate to EMV.  Acquirer processors must support EMV transactions by April 2013.  Beginning in 2015, card issuers and merchants accepting credit and debit cards will be affected by the fraud liability shift established by the payment brands.

While the U.S. payment market is now moving to EMV, Near Field Communication (NFC) technology is emerging as a useful vehicle for consumer transactions.  NFC is a communications technology that enables proximity-based communication between applications on mobile devices, tablets, personal computers, and other consumer electronic devices.  The technology supports an extremely simple man-machine interface, facilitating the use of NFC for a number of functions, including smart posters, identity validation, mobile coupons, mobile advertising, ticketing, mobile payments, access control, information exchange, person-to-person payment, and social networking.

According to Gartner, smartphones will constitute over 90 percent of the overall installed handset base by 2014.  The Mobile Movement Study of 2011 found that 70 percent of shoppers use a smartphone while shopping in a store, and 74 percent made a purchase as a result of using a smartphone.  The smartphone is becoming the platform of choice for shopping and represents a unique opportunity for retailers to engage with customers.  Consumers today are using smartphones to complete financial transactions, evaluate products and services, and participate in merchant loyalty programs.  NFC enables consumers to take this interaction to the next level.  NFC can improve the consumer experience and the merchant’s ability to reach prospective customers, and build loyalty with current customers.

The NFC Times found that there were less than 40 million NFC handsets worldwide in 2011.  However, according to iSuppli’s August 2011 forecast 544.7 million NFC handsets will be in use by 2015 (31 percent of all mobile phones); Informa Telecoms & Media predicts that by 2015, 630 million handsets will ship with NFC, representing 40 percent of all mobile phones.

These developments raise some important questions.  Are EMV and NFC complementary?   Will one impede the progress and acceptance of the other?   How do they fit together?  How can the payments industry move to take advantage of both technologies?

This Smart Card Alliance white paper is intended to answer these questions for merchants, issuers, acquirers/processors, and the mobile and NFC community in general.  Its objectives are to:

  • Provide a high-level description of EMV and NFC technology and their relationship to each other
  • Describe how contactless EMV works with an NFC mobile device
  • Describe how EMV and NFC technologies complement each other to deliver secure payment transactions
  • Describe  an overview of the ecosystem supporting NFC mobile EMV contactless payment provisioning and transaction processing

For the payments industry, adopting EMV could allow the U.S. market to reclaim a leading position, leapfrogging the rest of the world with EMV contactless and NFC-enabled EMV mobile contactless payments deployment.  Fraud can be reduced, and the next generation of payments innovation can flourish.

About the White Paper

The Smart Card Alliance Payments Council developed this white paper to describe how EMV and NFC complement each other and work together.

Payments Council members involved in the development of this white paper included: Accenture LLP; Acumen Building Enterprise, Inc.; Apriva; Capgemini USA Inc.; Chase Card Services; Clear2Pay; Connexem Consulting; Consult Hyperion; Datacard Group; Exponent; First Data Corporation; FIS; Gemalto; Giesecke & Devrient; Heartland Payment Systems; Identification Technology Partners; Infineon Technologies; INSIDE Secure; Interac Association/Acxsys Corporation; NACHA – The Electronic Payment Association; NagraID Security; NXP Semiconductors; Quadagno & Associates; SHAZAM; TSYS; Visa, Inc.; Watchdata Technologies Pte Ltd.

About the Smart Card Alliance Payments Council

The Smart Card Alliance Payments Council focuses on facilitating the adoption of chip-enabled payments and payment applications in the U.S. through education programs for consumers, merchants, issuers, acquirers/processors, government regulators, mobile telecommunications providers and payments service providers.  The group is bringing together payments industry stakeholders, including payments industry leaders, merchants and suppliers, and is working on projects related to implementing EMV, contactless payments, NFC-enabled payments and applications, mobile payments, and chip-enabled e-commerce.  The Council’s primary goal is to inform and educate the market about the value of chip-enabled payments in improving the security of the payments infrastructure and in enhancing the value of payments and payment-related applications for industry stakeholders.  Council participation is open to any Smart Card Alliance member who wishes to contribute to the Council projects.