uses two-way encrypted communication, adding layers of security that traditional credit cards can’t match. This combination of security and convenience has inspired countless small business owners to accept NFC payments .
Contents hide
1 What is Near Field Communication (NFC) mobile payment?
2 How do NFC mobile payments work?
3 Benefits of NFC Mobile Payments
4 Disadvantages of NFC Mobile Payments
5 Final Thoughts
6 Frequently Asked Questions About NFC Payments
6.1 Related publications:
What is Near Field Communication (NFC) mobile payment?
NFC (near-field communication) is a wireless communication protocol that allows two devices to exchange data over a secure, low-speed connection. It enables contactless payments using payment terminals known as NFC readers. Mobile NFC technology allows two different payment methods:
Credit and debit cards: Modern versions of credit and debit cards are equipped with a radio-frequency identification (RFID) chip that uses NFC to communicate with payment terminals.
Mobile phones, tablets, and smartwatches. Mobile wallet apps , which run via software on a user’s smartphone, smartwatch, or tablet, use the mobile device’s built-in NFC radio to communicate with NFC payment devices. In this way, mobile wallet apps can be used in the same way as credit and debit cards in tap-to-pay transactions.
How do NFC mobile payments work?
NFC mobile payments work by sending encrypted transmissions using near-field communication, a secure, low-speed radio standard. An NFC chip can be embedded in a smartphone , smartwatch, tablet, and even some laptops. These NFC devices run mobile wallet apps like Apple Pay, Google Pay, and Samsung Pay, which are linked to a user’s credit card or bank account. A customer can use the device to pay for something, and when they do, the amount is debited from their credit card or bank account. On the other side of the transaction, the merchant side, are point-of-sale (POS) payment terminals, which are credit card readers. These POS systems interact with the customer’s NFC devices in the same way they would with a chip-enabled credit or debit card. Both the payment device and the payment terminal send encrypted messages, making it virtually impossible for hackers to intercept financial data. Users cannot send payments from their NFC device without authorization in the form of a fingerprint, face ID, or password. So NFC mobile payments transmit all the same payment information as a credit card, but do so with multiple layers of security.
Benefits of NFC Mobile Payments
NFC mobile payments offer three clear benefits to consumers and businesses.
Convenience. NFC mobile payments allow shoppers to leave their wallets at home. They can simply tap their mobile device on a payment terminal at the point of sale . This turns smartphones, smartwatches and tablets into universal payment devices that customers can use both online and in-store.
Instant processing. Despite the many encrypted transmissions between NFC devices and payment terminals, the entire NFC mobile payment process is virtually instantaneous. The only thing the customer has to do is unlock their device with a fingerprint, face scan, or password.
Security : NFC mobile payments use end-to-end encryption . They also require users to unlock their devices and give permission before payments can begin. This adds layers of security to the payment process and prevents financial fraud that can occur with magnetic stripe transactions.
Disadvantages of NFC Mobile Payments
NFC technology adds convenience and security to the payment process, but it also has some drawbacks.
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Special equipment required. In order to accept NFC payments, merchants must invest in special payment terminals equipped with the necessary NFC radios. In addition to paying for the equipment, the merchant must also pay an electrician to install these terminals in their stores.
Transaction limits . Mobile wallet apps set transaction limits for their users, which can limit the size of their shopping cart and the amount they can purchase . Sometimes these transaction limits are significantly lower than the limits set for a regular credit card.
Security is provided only by the user's payment device. If a customer loses their mobile phone or it falls into the hands of someone who knows their password , that person can unlock the phone and make purchases through the user's mobile wallet account. To prevent this type of fraud, people should protect their Internet-connected devices with fingerprints or Face ID in addition to a password or code.
Final thoughts
Customers love the convenience of mobile payment apps, and mobile payments are growing. Global consumers will spend $1.78 billion via mobile payments in 2021 , and financial analysts predict that this figure will more than triple within five years. Small business owners are taking notice and adapting their operations to accept mobile payments. By adapting to new customer preferences, you offer convenience and security to your customers, who may show loyalty and appreciation in return.
Frequently asked questions about NFC payments
