What are NFC Payments? How can I accept them?

Customers are always looking for convenience, and consumer trends show that nothing is more convenient than NFC (near field communication) payments. Contactless mobile payments give consumers flexibility, connecting all their cards and enabling quick payments through their smart devices. NFC mobile payments take less time than chip cards and offer more security than magnetic “swipe” cards.  This marriage of efficiency and security is the new standard many consumers expect. 

  

What is an NFC mobile payment?  

NFC stands for near field communication, a process that allows devices to communicate with each other when in close proximity. It is often used for technology like key fobs, IDs, and payments. For all of these use cases, there is an additional level of security that comes from only connecting devices in close proximity. 

NFC payment technology allows mobile devices to interact with payment terminals. This form of wireless communication enables devices to interact with each other only when in close range. Any device farther than four inches away will not be able to connect or complete transactions. 

NFC payment apps, like Apple Pay and Google Pay, can be used in-store with mobile devices like smartphones or smartwatches. Even some chip cards can support NFC payments when paired with an NFC reader.  

  

How NFC Payments Work  

NFC technology uses radio frequencies to transmit communication between an NFC-enabled device and NFC reader. These radio frequencies are similar to RFID (radio-frequency identification) signals used for inventory tracking. NFC uses a specific frequency (13.56MHz) that only allows communication between devices that are very close together.  

POS (point-of-sale) NFC readers will send out a signal to look for NFC payment devices. When it finds the relevant NFC device, it transfers encrypted payment data between the two devices. This process is quick and secure, making it a preferred payment method for many customers. 

NFC payment devices use multiple levels of security. NFC readers can only connect to mobile payment devices that are unlocked and approved. They also only connect with one device at a time, which means NFC payments are unable to charge the wrong person or charge more than once without approval.  

  

How to Accept NFC Payments  

If you want to accept NFC payments, you will need to have a POS (point-of-sale) device that accepts mobile payments. Transactions will go to your merchant account, just like other credit card payments.  

Many popular payment service providers have NFC payment options. Here are some of the best merchants to choose from if you want to enable NFC payments:  

  • Square  

Square is an iOS integrated POS system that offers an EMV/NFC reader that can accept both chip cards and mobile payments. A Square reader starts around $49 and offers multiple features for businesses of all sizes.  

  

  • Clover  

Clover is an Android-integrated POS system that can integrate swipe, chip, and NFC readers. Clover readers start around $99 and have specific plans for different businesses sizes and needs.  

  

  • PayPal Zettle  

PayPal’s Zettle is a POS system that offers an EMV/NFC reader and can accept both chip cards and mobile payments, like Square. Zettle’s reader is pricier than Square, starting at $79, but integrates with both PayPal and Venmo payments.  

  

  • Helcim  

Helcim is a POS system that connects via Bluetooth to integrate swipe, chip, and NFC readers. A Helcim reader starts around $109, but their lower fees can save money for larger businesses.  

  

Mobile Payment Security vs Payment Card Security  

NFC payments are being prioritized by consumers for their ease of use, and by businesses for their added security benefits. Mobile payments are more secure than either magnetic strip cards or EMV chip cards.  

Magnetic stripe cards are vulnerable to thieves who use devices, called skimmers, to steal card information. Magnetic stripe cards hold data in magnetic strips along the back of the card that communicate payment information by swiping the card. These magnetic stripes transmit data simply, meaning they are easy for fraudsters to steal information from and clone.  

EMV chip cards are better than magnetic stripe cards as their chip technology secures the data. Instead of holding static information like a magnetic card, they create constantly changing digital signatures. This digital signature makes it incredibly difficult for thieves to steal information from chip cards. 

NFC payments are the most secure form of payment. If the mobile device the wallet is attached to uses proper security measures, like passwords and/or biometrics, the payment method is secure from fraudulent use. The payment information is also encrypted as it passes between the payment device and payment terminal. The mobile wallet is also required to be close to the NFC card reader, making the encrypted information difficult to intercept by bad actors. 

Physical cards can contain unencrypted data and can be more easily used if stolen. Between the protection provided for mobile devices and the data encryption used during the transfer of payment data, NFC payments are far safer than physical cards. 

 

Swipe cards provided quick transactions at the cost of security, and chip cards offered secure payments at the cost of efficiency. NFC payments are quicker and more secure than other payment methods. Integrating NFC technology into the payment process not only meets consumer expectations but also increases the efficiency of the payment process. 

 

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Topic(s): payments