In recent years, competition for financial innovation has grown in Thailand. Banks, digital wallet providers, and fintech businesses have invested significantly in Thailand’s payment infrastructure.

One important technology is near-field communication (NFC). NFC technology is used for contactless payment, also known as Tap to Pay. It has grown increasingly popular since the COVID-19 pandemic began in 2020, as customers sought ways to avoid touching cash or coins.

In this article, we examine NFC technology, including how it works to enable contactless, Tap to Pay payments. We also discuss the benefits of NFC technology in Thailand.

What’s in this article?

• How do Tap to Pay payments work?
  
• What are the benefits of NFC technology in Thailand?
  
• What to know about NFC technology
  

How do Tap to Pay payments work?

Tap to Pay payments use NFC technology, a short-range wireless communication technology that allows two devices to exchange information by touch or proximity. Payments with NFC-enabled mobile devices allow customers to tap their smartphones on a point of sale (POS) terminal and instantly transfer or deduct money from their accounts. NFC is designed to exchange data between devices over a short distance—no more than four centimeters. This provides greater security and control, reducing the risk of data being scanned or attacked from a distance.

NFC payment technology was first introduced in Thailand in the mid-2010s. However, it did not become popular right away for a few reasons. These include the small number of stores that supported NFC technology, customers’ unfamiliarity with it, and its incompatibility with many smartphone models. However, the COVID-19 pandemic triggered an uptick in the popularity of tap-and-pay payments, as contactless payment helped solve a major problem during the pandemic: customers no longer needed to touch banknotes or coins, allowing them to prevent the spread of the virus.

Today, NFC payments are not limited to contactless credit or debit cards or banking applications. They also extend to many smartphone models equipped with NFC chips and can be used as digital wallets to connect to bank accounts, credit cards, or other payment channels. A customer can make an instant payment by tapping or scanning an NFC reader at the POS, which can increase convenience, reduce transaction time, and save time for both customers and businesses.

What is NFC?

NFC technology allows communication between two devices that have embedded NFC chips. For payments, this communication typically occurs between a smartphone or contactless credit or debit card and a POS terminal equipped with an NFC module. Here’s a step-by-step breakdown of how it works:

• Enable NFC
  Smartphone users enable NFC on their devices by unlocking their phones and accessing an app that uses NFC payments (e.g., Apple Pay). They can link bank accounts or credit cards to the apps.

• Tap the device
  NFC has a short range of four centimeters. To make a payment, the customer taps or approaches the payment terminal with their smartphone or card. When the payment terminal detects the NFC chip, communication begins.

• Exchange information
  Once both devices connect, the system sends the necessary information for payment—such as the encrypted card number or token—to the payment terminal for authentication. The bank or card provider verifies the validity and account balance and confirms the transaction.

• Confirm transaction
  If the transaction is verified, the system approves the payment and summarizes the total for the business. Some apps might ask the customer to confirm with a personal identification number (PIN) or fingerprint scan for additional security. After the transaction is complete, the application immediately sends a notification summarizing the payment.

This technology makes payments faster and more convenient than those that require customers to type in a PIN or swipe a card.

Ways to use NFC

NFC technology has three main modes of operation: card emulation, peer-to-peer, and reader/writer. Each mode has different functions and uses:

• Card emulation: In this mode, devices such as NFC-enabled smartphones mimic smart cards or NFC tags. This allows card readers to read the data as if from a physical card. This can be used to replace credit, transit, or access cards for payment or identity verification without having to carry a real card.

• Peer-to-peer: In this mode, devices (e.g., two smartphones with NFC functionality) can communicate and exchange data directly. Data can be sent and received both ways. Generally, the International Organization for Standardization/International Electrotechnical Commission (ISO/IEC) 18092 standard is used for short-distance communication (i.e., no more than four centimeters). This allows high-security data transmission, such as sending image files or data between smartphones by holding the devices together.

• Reader/writer: In this mode, NFC-enabled devices act as readers or writers. The device sends an electromagnetic current to power the NFC tag, allowing it to read or write data. It can be used to read data, such as Uniform Resource Locators (URLs) and text. It can also be used to issue commands, such as turning on or off Wi-Fi and opening websites or apps.

Does NFC technology require the internet?

NFC payments typically occur through communication between devices, even when an internet connection is not available at the time of the transaction. NFC payments are often used for small purchases or low-value transactions. However, some transactions—such as high-value transactions, mobile payments, or information updates in apps—can require the internet to connect to external servers or databases. Internet access is needed to request approval from the banking system or service provider in real time to ensure completeness and meet security standards.

What are the benefits of NFC technology in Thailand?

NFC technology has the ability to wirelessly send and receive data between devices at close range without complicated steps. Thus, it can be used in a variety of ways.

NFC technology is used in digital payment systems such as Tap to Pay, contactless credit and debit cards, and smartphones with NFC capabilities. In addition, this technology has also been adapted for other tasks, such as connecting devices, sending data, and maintaining security. It is widely used in Thailand and brings many benefits to daily life, such as:

• Convenience: Customers don’t need to carry cash or multiple cards. They can make payments instantly with a smartphone or a card that supports NFC technology. Popular coffee chains—such as Café Amazon and TrueCoffee—have installed NFC machines for customers to pay via mobile banking or digital wallets.
  
• Reduced contact: Some customers might be concerned about their health and safety. A single Tap to Pay payment reduces contact between customers and cash, greatly reducing the risk of spreading germs. For example, Centara and Anantara hotels have replaced their room keys with NFC chip cards, which eliminates the need to touch keys.
  
• Speed: NFC technology shortens transaction times and eliminates the need for signatures or PINs, except in certain high-value cases. This can result in reduced checkout times, faster lines, and more customers served in less time. Convenience stores such as 7-Eleven and Family Mart have set up “Quick Pay” points where customers can tap their phones or NFC cards without having to sign or enter a PIN.
  
• Security: NFC has short-range communication and a variety of security measures, including tokenization, encryption, biometric authentication, PIN entry, limit control systems, and international security standards, such as Europay, Visa, and Mastercard (EMV).
  
• Improved data analysis: Businesses can conveniently collect marketing data, such as the number of taps and payments, time of use, location, and more. Lotus Supermarkets have launched a membership card using NFC technology that customers can tap to collect points and receive discount coupons. It collects real-time purchase and sales statistics and can send personalized promotions via the app.
  
• Reduced theft risk: Carrying cash can put customers at risk of theft or loss. Using NFC payments, where data is stored digitally, reduces the risk of cash theft. A customer can also immediately block the card or erase the data on their smartphone if it is lost or stolen.
  
• Enhanced communication: NFC tags are small chips that can store information, such as URLs, text, or specific commands. For example, at the Thailand Manufacturing Expo, organizers placed NFC tags on each company’s booth that linked to brochures, demonstration videos, or registration forms for quotation requests.
  
• Other applications: In addition to payment, NFC can be used for membership systems, loyalty cards, public transportation (e.g., smart tickets), event access, healthcare and medical businesses (e.g., storing and retrieving patient information), and smart device control in the home (e.g., Smart Home).
  

What to know about NFC technology

NFC payments played an important role in Thailand during the COVID-19 pandemic, making contactless payments important and helping to reduce the spread of the virus. As a result, Thai people are more familiar with contactless payments than ever before. For example, Techsauce reveals Thai customers used Tap to Pay via Visa contactless cards over two million times in September 2020. Since then, businesses have continued to install more Tap to Pay terminals for health safety. According to Marketeer, the use of contactless payments in Thailand has grown steadily since 2020.

The government, banks, and the private sector have placed greater emphasis on digital transactions, and there is intense competition in the payment services market. According to The Standard, the Bank of Thailand is studying NFC technology to be used in conjunction with PromptPay. A report from Global Data predicts that card payments in Thailand (including Tap to Pay) will grow at a compound annual growth rate (CAGR) of 9.3% between 2025–2029, reaching $101.4 billion USD by 2029.

The convenience and security of NFC technology—whether through data encryption, tokenization, or short communication distance—also gives customers and businesses more confidence in this technology. In addition to payment, NFC is being used in other areas such as mass transit, membership systems, event attendance, and more. As a result, the growth of NFC is likely to continue to expand and become one of the key technologies that will transition Thailand into a cashless society.