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Swipeless Payments Using NFC Technology: What You Need to Know

payments using nfc

Research and experts agree that mobile payments overall are sharply increasing [1]. New technology is making it easier and faster to accept payments from customers. Today’s swipeless cards and payment-enabled smartphones that make payments using NFC technology are the way to go if you want a cutting-edge checkout process.

These new payment options use something called near field communication (NFC) technology. Payments using NFC technology are very secure. They have a special chip inside which sends payment information securely to credit card companies and participating banks. Information is encrypted and has multiple layers of security built in — that’s the beauty of using advanced technology.

To make a purchase, the customer simply waves a NFC-enabled credit card or smartphone within a few inches of a NFC point of sale receiver, and payment data is transmitted via short-range radio waves from their card or phone to the receiver.

Who Supports NFC?

Contactless payments using NFC technology are based on open standards. That means if your business already has NFC terminals that can read NFC-enabled credit cards, it can also accept NFC mobile payments. However, there are a number of mobile payment platforms customers can choose from to make purchases, and the terminal has to be configured for what you want to accept.

As far as traditional credit cards that are enabled with NFC technology, there’s MasterCard PayPass [2] and Visa PayWave [3].

NFC-enabled credit cards have been around for a number of years. It is proven technology. Cards now also offer apps so that consumers can use the same payment system with certain mobile phones, instead of a plastic card.

When it comes to mobile payments using NFC technology from your phone, Google Wallet [4] is frequently discussed. Customers can make purchases both in-store and online using Google Wallet, but only those with certain Android phones from select carriers like Sprint or Virgin Mobile can download the smartphone app.

The biggest competitor to Google Wallet in mobile payments is Isis, which is a joint venture run by AT&T, Verizon Wireless and T-Mobile (whose phones, by the way, do not support Google Wallet). Isis is solely focused on in-store payments using NFC technology, where Google Wallet can be used in-store and online. Isis, however, features the ability to store loyalty cards, which Google Wallet no longer allows. Isis phones offer the option to come with prepaid American Express Serve or Visa cards (called the Isis Cash Card). Isis has not yet launched nationwide, but has announced it will later this year.

What are the Benefits to NFC?

The biggest perk to an NFC checkout is just how quick and easy it is: Customers just tap their cards or phones and go. It eliminates time spent digging around for cash or swiping a card. With most NFC payment systems, approvals are almost instantaneous.

In the case of key fobs or mobile phones, you don’t even have to pull out a card. Just wave your phone or device next to the payment reader.

While that may not sound like a lot of time saved, when you multiply it over hundreds, thousands and tens of thousands of transactions, the efficiencies add up. Plus, when cards are not handled, customers may feel more secure because the card does not leave their possession. Don’t forget the side benefits: This also may cut down on the spread of germs from handling cards or making change.

Customers using a platform that supports loyalty cards or coupons enjoy an even more seamless transaction. When they tap their cards or phones, the loyalty card information is sent along with payment data, making for a very efficient checkout process. All of this means shorter lines and much happier customers.

Many NFC platforms also make it possible to connect with your customers where it counts. For example, the Isis Mobile Commerce Platform allows you to deliver special offers and promotional information directly to a customer’s mobile wallet. Google Wallet touts a similar feature using Google Offers.

Are Payments Using NFC Technology Secure?

Mobile payments using NFC technology are very secure — they are just as secure as traditional plastic cards [5], and merchants have the same level of protection from fraud as with traditional credit cards. Customers’ stored account information is encrypted, and each transaction can be authenticated by PIN. Data is also encrypted when the chip and POS receiver are communicating, making it difficult for even a sophisticated fraudster to “eavesdrop” and try to steal the customer’s information.

How Much Would it Cost?

Both Google Wallet and Isis advertise that you will pay the normal card-present rates for transactions, despite the fact that the card is never swiped or shown during checkout. There are no additional charges from either company.

However, to accept payments using NFC technology from any platform, you’ll need equipment that accepts contactless payments. Talk with your merchant service provider about getting NFC equipment and the cost involved.

Expect Growth in NFC

As with any newer technology, there has been some hype around NFC payments, especially those using mobile phones instead of traditional-looking credit cards. The fact remains that growth in payments using NFC technology is likely to continue, especially as electronic and mobile payments in general soar. Hedge your bets by investigating now, educating yourself and your staff, and signing up for a system so that you are in a position to deliver what customers demand, when they demand it.

NFC [6] Photo via Shutterstock