With digital communication turning a new page and service providers starting a new phase in online service delivery, AI-powered identity verification has become a valuable and critical part of the Know Your Customer (KYC) process.
And now, NFC, or Near-field Communication, is proving its worth in enhancing the KYC process as an identity verification tool.
What is Near-Field Communication (NFC)?
Near-field Communication, or NFC, is a short-range wireless connectivity technology. It allows smartphones, tablets, laptops, and other NFC-equipped devices to transfer data between one another. The communication between the two devices only requires proximity. It does not need the Internet, and the data transfer is relatively rapid.
Key facts to remember:
- People and industry experts often describe NFC as the “ultimate connectivity,” which adds to the smartness of a user’s smartphone or other electronic devices.
- It is similar to a proximity card and is based on inductive coupling between two antennas fixed in NFC-enabled devices to communicate in one or both directions.
- NFC uses a 13.56 MHz frequency in the globally available unlicensed radio frequency ISM radio band through the ISO/IEC 18000-3 air interface standard at a data-rate range between 106 to 424 Kbps.
The History of NFC Technology
The term “Near Field Communication” (NFC) was coined in the mid-2000s and is frequently used interchangeably with the term “contactless.” It was Nokia, Philips, and Sony who came together in 2004 to boost NFC technology. Their motive was to introduce NFC technology into our daily lives.
In 2003, Transport for London (TfL) introduced the NFC-enabled Oyster card as a payment method for public transport in London. Nokia launched their first NFC-enabled phone in 2007, with later Sony introducing NFC in their smartphones.
Until 2012, TfL had issued over 43 million oyster cards, and more than 80% of all journeys on public transport in London were made using these cards. And in 2017, New York City’s Metropolitan Transit Authority (MTA) introduced an NFC-enabled system where users could pay their subway fares using NFC.
Why is NFC Important Today in the Context of Identity Verification?
Financial companies and other businesses require fast and seamless customer onboarding processes to attract new users; otherwise, competitors can swiftly exploit the situation. Since many industries and countries are adopting chip-based ID documents to enhance security and prevent fraud, there is a rapidly expanding market for NFC-based ID verification.
The increasing importance of high-quality KYC processes is evident as in-person transactions become less common. Organizations should adopt advanced solutions and keep pace with emerging technologies to transition to digital alternatives effectively to stay ahead of their competition.
What are NFC Chips, and How Do They Work?
One of the objects involved in the contactless technology of NFC contains an NFC-integrated circuit, commonly referred to as a “chip”. The other object is responsible for reading the NFC chip. This facilitates communication between various objects, such as payment terminals, payment cards, chip-based ID documents, and smartphones.
When combined with an antenna, the NFC chip forms a self-contained device known as an NFC tag. The antenna enables the chip to interact with an NFC reader, like a smartphone, by generating an electromagnetic field. The NFC chip utilizes this field to communicate data wirelessly.
The main use cases of NFC chips include:
- Conducting contactless transactions, including payments and ticketing.
- Connecting wireless components to a desktop or mobile device.
- Accessing digital content by using an NFC-reading device, such as a smartphone, to interact with a “smart” poster.
NFC uses a straightforward near-field wireless connectivity technology. Before NFC came into being, retailers used radio-frequency identification (RFID) to tag and track products inside their stores. The single NFC chip installed in a device works as one part of a wireless link.
Magnetic field induction activates that chip when another NFC chip enters close range and establishes a peer-to-peer (P2P) network. Once both the chips are active, the users can exchange small amounts of data between the two devices.
While the technology may appear similar to Bluetooth and WiFi connectivity, it is not. NFC connection uses electromagnetic radio fields, whereas Bluetooth and WiFi rely on radio transmissions.
How are NFC chips Used to Verify Identities?
NFC-enabled biometric passports, identity cards, and residence permits have NFC capabilities. This allows for easy data extraction and cryptographic verification by tapping the documents against eGates or NFC-enabled devices.
NFC is a highly secure method of document and identity verification. The NFC chip contains the same biometric data as the physical document, including a high-resolution digital photo. This technology can compare identity data with the person’s selfie, providing extra protection against altered pictures that fraudsters might try to submit during identity verification.
How is NFC Used During the Identity Verification Process?
While the current identity verification is miles ahead of its predecessors, the ones based on visual checks still fall short because:
- Fraudsters today are becoming smarter and wiser. They create plastic copies of authentic documents and manufacture counterfeited documents that the naked eye cannot differentiate from the real ones.
- Company agents have to follow a set of predefined rules during video calls. For example, document bending or showing document security zones against the light to verify the document’s integrity. The whole process is time and resource-consuming.
These problems pose a significant obstacle to companies who wish to simplify their identity verification process while ensuring that it is fail-proof. NFC technology can help solve these issues of identity verification. You can scan and capture the data stored in the tiny chips of identity documents. The solution has become increasingly common, with close to a billion e-passports issued worldwide containing chips with their owner’s personal information embedded in them.
NFC technology can also benefit the regular KYC processes that many businesses apply when bringing in new customers. Of the 3.2 billion active smartphones today, 2 billion of these devices are NFC-enabled. The growing number reflects how users agree to adopt self-verification services and applications. With mobile onboarding turning into a redefining solution, NFC is helping the current identity verification solutions offer additional security methods while enhancing the customer experience. It proves to the customer that the process is legitimate and reduces the operational cost simultaneously.
NFC-enabled IDs help governments and private organizations create a secure and reliable network. It helps reduce and eventually eliminate identity fraud in real-time. Industries and people can be assured that the NFC-based identity document is fault-free since the Personally Identifiable Information (PII) on the document is matched against the data extracted from the chip. During the facial biometric verification, a facial photo of the holder can be matched with the image stored and extracted from the chip.
On top of it, the users can verify their identities from any place using their ID documents and a smartphone.
NFC-Based Identity Verification Workflow
Companies should establish an effective identity verification process to accommodate users with chip-based IDs and NFC-capable smartphones. Here’s an example of how the verification flow could be structured:
- The user captures a photo of their ID document.
- The verification system assesses whether the user’s phone and ID document support NFC functionality.
- If NFC is supported, the user needs to tap their phone against the ID document.
- The verification system extracts data (name, document number, and issue date) from the NFC chip embedded in the document and cross-references it with the corresponding information extracted from the photo.
The chip can be read within seconds, reducing friction for the end user and improving the overall identity verification process.
iDenfy’s NFC Verification Solution
iDenfy’s team understands government organizations’ and private companies’ challenges during the KYC and customer onboarding processes. These operations require quick customer data verification to save time and enhance customer experience.
That’s why we have successfully embedded the NFC-enabled identification process into our systems which covers the majority of passports and ID cards issued globally.
And since all these documents, including those issued during the last five years, support NFC recognition, it has a much higher adoption rate than anticipated.
Find out more about NFC-enabled identity verification here, or get started right away.
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