NFC and NFC Payments Possible in Nepal? By Prachanda Muni Bajracharya

Gurzu Confidential • Enables communication between two electronic devices • Distance: 4 cm or less • Based on inductive coupling • Similar to RFID but with two way communication • Developed by Sony, Nokia, and Philips (The NFC Forum) • Frequency range: 13.56 MHz • NFC Standards: ISO/IEC, Felica 2 What is NFC (Near-field communication)?

Gurzu Confidential • Two types of NFC communication: • Active • Passive • NFC device works on three modes: • NFC card emulation: Apple pay, Google pay • NFC reader/writer • NFC peer-to-peer More on NFC

Gurzu Confidential 4 Devices with NFC Smartwatches Smartphones Laptops Tablets NFC Readers Credit/Debit cards NFC Tags

Gurzu Confidential ● Contactless Payment ● Open webpage through URL ● Unlock door ● Transfer files ● Connect to WiFi network ● Set an alarm ● Make call and send SMS ● … and many more 5 Applications

Gurzu Confidential ● Contactless payment using NFC technology ● Payment can be done through a mobile phones, wearables, debit / credit cards, etc ● Uses security techniques like: ○ Tokenization ○ Point-to-Point Encryption(P2PE) ○ Maximum transaction limit ● Also known as “Tap-to-pay” 6 NFC Payment

Gurzu Confidential ● Internet access is not needed as compared to QR Payments ● Fast and comparatively secure than other payment options ● In some cases works without a power supply ● Payment without pins or passwords as compared to Debit/Credit cards ● Massive growth during Covid NFC Payment vs … …but it is not a perfect solution

Gurzu Confidential ● Lack of awareness ● Less number of NFC services ● Only few Android devices have NFC capabilities. Probable Reasons: To lower the cost and lack of NFC services ● Higher cost than QR payments Why it’s not in use in Nepal?

Gurzu Confidential Possible in Nepal?

Gurzu Confidential ● Nepal Clearing House Limited (NCHL) has launched the NFC payment service on its ConnectIPS payments app on February 2023 ● FonePay has launched FoneTAG for offline payment through mobile phone phone in February 2023 ● Everest Bank in collaboration with has launched FoneTAG on August 2023 ● Contactless payment through payment cards has already launched by various banks. NFC in Nepal

Gurzu Confidential ● NFC payment can be made available alongside QR payment. ● Esewa, Khalti and other banking app can also have “Tap to pay” service. ● NFC may be available on newer Android phones if the NFC services in Nepal increases. ● Payment through wearables In Future

“ Gurzu Confidential Prachanda Muni Bajracharya Thank you!!! 12