RFID means radio frequency identification, while NFC stands for near field communication.RFID is a wireless technology mainly used to transfer data. The main purpose is to identify and track automatically a tag attached to an object. NFC is a is a short-range high frequency wireless technology that enables devices and smartphones to establish a communication with each other by touching them together or bringing them into proximity.

Introduced in the 1980s, RFID was designed to improve upon the use of printed barcodes used for tracking inventory through the supply chain. Unlike a barcode that requires line-of-sight to read, RFID works as a one-way wireless transmission between an RFID tag and reader. Both tag and reader need to be within range of one another for data to be transferred. Read-range varies but distances of 1m to 100m can be achieved.

Nearly 20 years after the introduction of RFID, NXP, Sony, and Nokia introduced Near-field Communication (NFC) to add contactless data transfer to low power mobile devices. Today NFC is standard hardware on all major smartphones making the technology easily accessible, and ripe for growth.

Put simply,RFID is the process by which items are uniquely identified using radio waves, and NFC is a specialized subset within the family of RFID technology. Specifically, NFC is a branch of High-Frequency (HF) RFID, All NFC tags are HF RFID tags, but not all HF RFID tags are NFC tags. NFC operates in a very specific subset of the high-frequency range —13.56 MHz— and have very different use cases and implementation considerations from other RFID categories. NFC is designed to be a secure form of data exchange, and an NFC device is capable of being both an NFC reader and an NFC tag. This unique feature allows NFC devices to communicate peer-to-peer.

By definition, RFID is the method of uniquely identifying items using radio waves. At a minimum, an RFID system comprises a tag, a reader, and an antenna. The reader sends an interrogating signal to the tag via the antenna, and the tag responds with its unique information. RFID tags are either Active or Passive.

RFID is a one-trick tech: A reader detects and pulls information from a tag. That’s about the extent of these systems. NFC is more complex.

NFC duplicates RFID’s feat by reading smart tags, thanks to its read/write operation mode. But in addition to read/write capabilities, NFC has two other modes, both of which involve dynamic, two-way communication: card emulation and P2P (peer-to-peer). That’s where smartphones and other NFC-capable devices come into play.

NFC is based on the same protocol as RFID—and both passive RFID and NFC operate in the same 13.56 MHz frequency—but the use cases are entirely different. So while NFC is an excellent data transmission and exchange medium, it isn’t appropriate or even remotely viable for asset location management. Here’s why.

In radio communications, “the near field” refers to the area close to an antenna where the magnetic field being produced is detectable. NFC applications need to be within an inch or two (sometimes only a few centimeters) from the reader, which allows efficient transmission of energy.

NFC is almost exclusively used for high-speed data transfer between two electronic systems, like a smartphone and a payment reader in the checkout line, or two smartphones exchanging data, for example.

NFC has two particularly noteworthy features.

First, NFC enables bi-directional communication through dual-mode hardware, so a device can act as both a reader and a tag. For example, you can “bump” two Android phones together and exchange information using the NFC standard, or set up a secure session to exchange crypto for payment.

Second, NFC allows communication from passive tags. For example, when you place your NFC-enabled credit card on a tap-to-pay credit card terminal, the energy from the NFC reader sends a burst of energy and excites the NFC chip in the card. At the same time the reader is verifying the card, the card is ensuring that the reader is valid. This kind of two-way processing isn’t something you can do with passive RFID; when the passive reader sends out a burst of energy, the passive RFID tag can only transmit back a number.

NFC therefore shares many physical properties with RFID such as one way communication and the ability to communicate without a direct line of sight. There are however three key differences.

1. NFC is capable of two way communication and can therefore be used for more complex interactions such as card emulation and peer-to-peer (P2P) sharing.

2. NFC is limited to communication at close proximity, typically a few cm, although distances up to ten times this are theoretically possible.

3. Only a single NFC tag can be scanned at one time.

The requirement for close proximity can make NFC a more secure option. This, together with NFC’s ability for two way communications, has made it an ideal choice for contactless payments.

NFC technology provides secure, one-to-one coupling, making it useful for contactless payment applications such as ApplePay™. And because almost all smartphones function as NFC readers, NFC tags are popular in promotional labels and posters, and are also a good tool for personalized customer engagement.

RFID Vs. NFC Costs

It’s difficult to compare RFID (both passive and active) to NFC apples to apples, because the cost often depends on what you’re using the technology for. The NFC chip in your credit card, for example, is roughly equivalent to the cost of a passive RFID tag—both cost only pennies.

An NFC system becomes more expensive when is used for dual-mode technologies, like a smartphone application or credit card communicating with a credit card terminal. Keep in mind that most smartphones today have NFC chips built in, which minimizes cost for those creating an NFC-based system.
Passive RFID becomes more expensive if you require more high-power readers, which, as previously mentioned, is necessary if you want to use passive RFID for location management.
Active RFID becomes more expensive based on the types and number of tags, and the number of readers you deploy. Keep in mind that active RFID tags run anywhere from $5 to $15 apiece, and are battery powered.

At the end, NFC builds upon the standards of HF RFID and turns the limitations of its operating frequency into a unique feature of near-field communication.

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