Consumer shopping behaviors have changed dramatically in the last decade, and merchants must keep up with customer shopping preferences — including the desire for fast, secure, and convenient payment methods.
Luckily, advances in payment technology such as near field communication (NFC) payments pave the way for an improved experience at checkout. In this post, we’ll dive into the ins and outs of NFC mobile payments, including what they are, how they work, and how to implement them in your business.
What are NFC payments?
NFC payments occur when a mobile wallet or an enabled credit or debit card communicates with a payment terminal, sending encrypted payment information from the customer to the retailer.
Mobile wallets are more prevalent than ever, and as a result, NFC mobile payments are also more commonplace. Customers who want an added layer of convenience and protection can use their mobile devices with Apple Pay and Google Pay at retailers whose POS devices support tap-to-pay with cards and mobile payments.
Tap-to-pay cards are now being issued in greater numbers as old cards expire, and banks send replacement cards with this capability enabled by default. Cards with this function have a symbol on them resembling a sideways WiFi icon.
How do NFC mobile payments work?
Near-field communication technology connects the two NFC-enabled devices in close proximity to one another — usually a few inches at most — to transmit payment information. A key differentiator with NFC mobile payments is the two-way encryption, making this a more secure payment option than swiping or inserting a credit or debit card.
The card information is encrypted when sent to the payment terminal, and also requires authorization from the mobile device with either face ID, fingerprint, or a passcode. Once validated, the transaction information is relayed to the NFC terminal with a randomly generated one-time use code which is sent to the merchant instead of the customer’s debit card.
Card information is not transmitted in a way that hackers can use, and the one-time code which sends encrypted payment information cannot be used again, making it useless to hackers. Between needing very close proximity to the terminal and biometric or multi-factor authentication to proceed with the transaction, NFC payments do not happen accidentally and are difficult to compromise.
Addressing safety concerns
Despite NFC’s above-mentioned security capabilities, some consumers are still hesitant to use mobile wallet payments or the tap-to-pay function of their cards. However, confidence in NFC payments is increasing, especially in younger cohorts, where 65% of people aged 18-24 and 55% of people aged 25-44 state they are either very or somewhat likely to make tap-to-pay purchases.
Digging deeper into customer hesitancy about NFC payments reveals an opportunity to educate customers and ease their concerns. Common reasons for late adoption from customers include hesitation about payment security and uncertainty about how to make the payment. Fortunately, NFC-enabled payment devices accept traditional card payments, and customers can choose what feels right for their comfort level.
Other reasons to consider contactless
Providing a safe shopping experience goes beyond social distancing and sanitation protocols while customers are shopping. In any retail environment, payment terminals at checkout get a lot of activity. While retailers would like to sanitize between shoppers, in practice, this is often untenable. Though some physical interaction is required with the terminals using NFC payments, it offers a safer option with minimal contact.
Contactless payments are also highly convenient for customers, and allowing this as an option lets them pay on their terms. Many new credit and debit cards are also equipped with tap-to-pay embedded in the card. This is beneficial to merchants because the same technology needed to accept mobile payments is used for contactless credit and debit card payments.
The rise in the popularity of contactless payments has been steep in the last few years. The US was fairly slow to widely adopt NFC payments, with just 3% of cards in use in 2018 enabled for contactless pay. However, usage of contactless payments rose 150% since March 2019, even before the pandemic, which caused a drastic change in customer shopping behaviors and a further increase in contactless payments.
How merchants accept payment is also closely tied to customer service. Honoring all payment types builds loyalty and makes the shopping experience smooth and convenient from start to finish. Keeping an updated POS system also instills customer confidence that the business takes speed and security seriously.
How can merchants implement NFC mobile payments?
To implement NFC mobile payments, merchants must have the correct equipment. NFC mobile and other contactless payment terminals include credit card machines with embedded NFC technology, chip readers, card swipers, and monitors.
The first step in adopting contactless payment terminals is figuring out which one is best for your business.
There are many advanced POS technologies on the market, and the size of your business and customer profile, along with other unique business needs, will determine which POS system and payment terminal is the best fit. For example, a restaurant will have a different point of sale needs than a small clothing retailer. When consulting with your payment processing provider, it’s important to discuss these needs so the appropriate equipment and setup can be determined.
It’s time to go contactless with the help of NFC mobile payments
The use of contactless payments is poised for further expansion as customers realize how quick, convenient, and safe NFC payments are. Since the pandemic is far from over, and the risks of interacting in large public spaces remain high, it is necessary to take multiple measures to ensure customer safety. Merchants can emphasize the hygienic benefits of not physically interacting with a payment terminal when promoting this capability in stores, alongside the security benefits.
Businesses have had to adjust their operations to meet safety standards for their employees and customers. Companies must also continue to evolve with technology advancements to stay relevant and current. Having an out-of-date payment processing system is an inconvenience to customers and a security risk. Providing contactless payment options is one measure that offers many benefits to any organization and its constituents.
This is where Stax comes in.
Stax is compatible with modern payment terminals that can facilitate NFC mobile payments.
In addition, our platform provides a dashboard to help businesses manage financials, payments, invoices, and inventory. Stax gives valuable information about sales data in an all-in-one platform to help you run more efficiently and with better business insights.
There are many payment processing options on the market, and finding a partner who will best meet your needs and provide ongoing support is critical for any business. Stax strives to deliver the best experience with dedicated support, 24/7 customer support, including phone, email, and live chat.
Another essential component of choosing the right payment processing company is affordability. Depending on the size and scale of the company, the cost structure for transaction processing is an important consideration and varies by company. Stax offers transparent pricing without hidden fees or contracts, allowing merchants to implement an all-in-one payment processing platform without the risk of unexpected expenses.
Get in touch with us today and learn about Stax’s NFC-enabled terminals and how we can help you expand your contactless payment options.