How does NFC SIM work

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NFC: The technology prevails

“Paying with your mobile phone” or “paying with your mobile phone” - that doesn't mean online shopping at Amazon and Co., but rather paying at the supermarket checkout. The mobile phone replaces the EC card.

The technology used here is called NFC (Near Field Communication). With NFC, data can be transferred contactlessly between two devices or between a device and a card over a short distance of around four centimeters.

How NFC works exactly and what smartphones can do with it in addition to paying, we explain in the article All-rounder NFC.

Since 2015, the tills of shops that accept credit cards in Germany have been equipped with NFC readers. You can recognize shops where you can pay using NFC by this symbol.

Currently, more than 100,000 checkouts are NFC-enabled - at Aldi, Lidl, Rewe and many other large shopping chains.

Many credit cards and EC cards are now also NFC-enabled. At NFC checkouts, all you have to do is hold the card to the reader to pay. No PIN is required for credit cards up to an amount of 25 euros. Visa has now raised the limit to 50 euros.

Turn your cell phone into a wallet

Paying with an NFC-enabled mobile phone works in principle like paying with an NFC-enabled bank card. You also need an app that carries out the payment process at the checkout via NFC. You have to fill this app with money beforehand. There are several possibilities for that:

  • Prepaid cards: For example, you can buy a voucher card for Google Pay in the drugstore and then enter a code in the app.
  • Credit cards: You can store credit card details in all apps.
  • EC card / direct debit: In some apps, it is possible to store an EC card or transfer credit to the app by direct debit. This is only recommended if the app is from your own bank.

If you hold your cell phone up to the cash register, it pretends to be a credit card itself.

Can my cell phone use NFC?

Every smartphone that has an NFC chip installed can use NFC apps - such a chip is now standard equipment. To find out whether your smartphone is NFC-capable, go to the device's settings and look for the item "NFC".

With some providers, you can upgrade your smartphone with an NFC sticker at a later date. The so-called NFC SIM card, which you need for some services, does not contain an NFC chip. This SIM card only has a specially secured memory chip in which payment data, for example the credit card number, can be securely stored. So you still need an NFC-enabled mobile phone or a sticker.

Some apps work without such a security memory. In this case, no payment data is stored on the mobile phone at all, but only on a specially secured server of the provider.

The mobile phone then transfers the data required for payment from the provider's server. The actual credit card number is not used, just a term derived from it, a so-called token.

NFC-enabled iPhones have built-in security memory as standard, so they do not need a special SIM card.

Pay on the go with Google Pay

Google Pay has been available in Germany since July 2018. To use the service, you need the Google Pay app, a suitable credit card or a PayPal account. The service is currently only available for Android devices.

Users can now save credit cards from numerous providers in Google Pay and then pay at the checkout via NFC. A PayPal account also works as a payment method if it is linked to a bank account (not a credit card).

You can find the current list of participating banks here. If your bank is not yet listed, you can still use the service to pay in online retail.

Google Pay has some minimum requirements for the security of your operating system and device. Some no-name manufacturers and old Android versions (4.4 and older) are not supported.

Pay on the go with Apple Pay

Apple's payment service has also been available in Germany since December 2018. Apple Pay can be found in the device settings of every iPhone with the latest operating system.

Apple has also been able to get numerous financial service providers to work together. The current list of providers whose debit cards you can save in Apple Pay for payment via NFC can be found here.

With the start of Google Pay and Apple Pay in Germany, most of the other wallet apps have practically disappeared: The Boon wallet service from Wirecard Card Solutions Ltd. (UK) can only be used in Germany in combination with Google or Apple Pay no longer as a standalone app.

Banks offer payment apps

Some banks have launched their own payment apps for Android.

Deutsche Bank and Postbank have been offering their customers an NFC payment option via app since April 2017. The apps are called Deutsche Bank Mobile and Postbank Finanzassistent.

Also in the running are the German savings banks with the mobile payment app - your digital wallet, the Volks- and Raiffeisenbanken with a new function for "mobile payment" within their VR banking app and BW-Bank with the BW-BankCard app pay.

With the BankCard Mobil, the Austrian savings banks and Erste Bank offer an app that turns their customers' smartphones into a bank card. However, it can only be used by customers who have an Android device and a mobile phone contract with T-Online, A1, Drei or Tele.ring.

Some retail chains have developed their own payment apps that don't work with NFC. For example, the supermarkets Netto, EDEKA, Kaufland and Galeria Kaufhof offer their own payment apps. The company Valuephone GmbH, which handles the payment process, is behind all of them.

How secure is paying with the NFC app?

We have dedicated our own guide to the topic, in which we describe specific risks, uncover myths and give practical tips on how you can protect yourself.

Data protection for mobile payments

If you pay by app, you share your purchase history with the app provider. In addition to the bank, the payment service provider and other parties involved, another company learns what you spend your money on.

For example, Valuephone, Deutsche Post, their own house bank and Netto’s commercial bank are all involved in processing payments with the Netto app. The terms of use of Google Pay are also extremely problematic.

Apps that are issued by your own credit institute have a clear advantage here. As a rule, banks do not live from the business of user profiles and what you buy is something your own bank finds out about.

Nevertheless, the following still applies: only cash is anonymous.

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