There are three contenders competing for dominance in mobile payments.
NFC – or near-field communication, is a contactless data transfer system similar to RFID. When two NFC-enabled devices come into range, you can transfer data from one to the other (such as bringing a phone in range of a credit card terminal).
NFC is found in a lot of phones, especially the flagship devices from Samsung, LG, and Sony. Apple finally jumped into the NFC game in 2014, and Google relaunched its mobile payments service as Android Pay in 2015. Samsung also launched its own app, aptly named Samsung Pay, in 2015.
NFC is a safe method for payments. Sensitive data is stored in a secure element, either built into the SIM card of a phone or placed in a separate chip. In most cases, retailers never actually see your card or bank account data.
QR Codes – or quick-response codes, have the sort of ubiquity that NFC lacks. They work a bit like your standard bar codes, except that instead of relying on one-dimensional analog scanning, they are digital. That means that with a QR code reader app, your smartphone’s camera can be temporarily converted into a scanner. QR codes can embed way more information than your standard bar codes, which gives them the power to do things like open mobile sites, direct you to YouTube Videos, and even enable you to complete mobile payments.
iBeacon – is an Apple-developed technology that uses Bluetooth Low-Energy (BLE, or sometimes also called Bluetooth Smart). Unlike the other two types of technology, it’s really still in the developmental stages. While it can be used for mobile payments, at the moment the biggest application for iBeacon is actually as proximity alert or geo-fence that can go where GPS doesn’t.
It works like this: iBeacon units are set up throughout a building (such as a department store). When someone with an iBeacon-enabled device comes into range of those beacons, they transmit information. Some of the ways this technology could be used would be to transmit mobile coupons or other special offers, to guide customers throughout the store by department, or even to help them find specific items on a shopping list.
NFC devices need to be within 8 inches (though 2 inches is really most effective). iBeacons, on the other hand, have a range of 50 meters, or about 165 feet.
For payments, iBeacons would work nearly the same as NFC: the phone would wirelessly transmit payment information to the terminal or beacon via Bluetooth.
It’s also worth noting that while iBeacons are Apple technology, they are not exclusive to iOS devices. The phone just needs to have Bluetooth Smart and the appropriate app.
Samsung announced its own version of the iBeacon, called Proximity, at its 2014 developer conference in November. it works the same way as iBeacons, but rather than going through an app, Proximity works directly with the phone’s hardware.