Near field communication, NFC, is a short-range, wireless data transfer between two enabled electronic devices. In the payment processing world that means it allows two devices, like a smartphone and a payment terminal, to talk to each other when they are within range (usually about two inches) to complete a transaction. Sometimes near field communication is referred to as contactless payments or the wireless version of EMV (Europay, Mastercard, and Visa or chip card payments.)
NFC is another payment method option and does not interfere with magnetic stripe or EMV chip card transactions. It allows the business to meet the customer’s payment preference by offering another option. Similar to chip card transactions, there is increased security with the transaction as NFC includes dynamic encryption for each transaction.
How does it work?
Both the customer and the business need to have technology in place to allow NFC payment transactions. For the customer, they need to utilize a mobile wallet on their phone. The phone may have one included or they can download a mobile wallet app such as Apple Pay, Android Pay, or several others. The customer loads their credit or debit card information to the app. The technology within the app and phone provides an effective barrier against fraud. NFC mobile payments are dynamically encrypted to prevent hacking, and the phone has additional security of fingerprint technology or PIN entry. The customer may also ‘turn off’ their mobile wallet card at any time. For the business, they need to have an NFC enabled point-of-sale terminal. With the implementation of EMV at the end of 2015, most credit card terminals also included NFC capability. Businesses can check with their merchant services processor to confirm functionality.
The credit card terminal initiates the transaction as the cashier enters the transaction amount then the terminal awaits payment information. If NFC is enabled, the customer opens the mobile wallet app on their smartphone or device, selects the particular card, then taps, holds, or waves the device over the NFC enabled terminal reader until payment is accepted. The transaction usually completes faster than an EMV chip card transaction.
Why allow NFC payments?
NFC payment transactions are secure, fast, and convenient. The dynamic encryption and short communication distance between devices provide security for the transaction similar to EMV chip cards. Additionally, the customer’s card is never out of their hands. The transaction runs faster than EMV transactions which may speed up lines and improve customer satisfaction. Today’s customer is fast moving and often carrying their smartphones and may not always carry their purse or wallet. By enabling NFC payments, the business appears tech savvy and doesn’t miss the opportunity for a sale. Mobile wallets have increased in popularity over the last three years.
Jennifer Autian is the founder of TCA Business Solutions and an independent representative of merchant services. To learn more about NFC technology or explore other payment processing options, connect with her at 678-523-8760 or by email at Jennifer@tcabiz.com.