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NFC: The Technology Behind Contactless Payments + Why You Should Accept It

nfc-contactless-payments

Contactless payments have been making headlines as increasingly more consumers opt for the safety and convenience of a touchless shopping experience. The broad term “contactless” covers several types of interactions and technologies, including EMV chip cards, mobile wallets, QR codes, and in-app digital payments. This article takes a closer look at the primary technology behind most contactless payments solutions: Near Field Communication (NFC).

NFC is the technology that allows two devices—like your phone and a payment terminal—to talk to each other when they’re very close, typically within two inches. NFC uses a tiny microchip and radio antenna to conduct the tap-and-go experience. In order for NFC contactless payments to work, both the payment terminal and the payment vehicle (i.e. card, phone) must be enabled with NFC technology.

Credit Debit Card

Cardholders can easily tell if their card has NFC capabilities by checking for the contactless indicator, which looks like a Wi-Fi symbol turned sideways. Most payment terminals feature the symbol on the exterior case or on the display.

Fast, Convenient and Growing

NFC has been the primary technology used for conducting contactless payments for nearly 20 years. NFC enables convenient contactless payments via EMV credit and debit cards, as well as mobile wallets including Apple Pay, Android Pay and Samsung Pay. Consumers simply wave their card, phone or wearable device (Apple Watch, Fitbit) near a payment terminal and transactions are completed in less than two seconds!

The COVID-19 pandemic has fueled the demand for NFC contactless cards. In 2018, just 3% of cards in use in the U.S. were contactless. Visa added 80 million contactless cards in the first half of 2020 and expects 300 million contactless Visa cards in the US by the end of this year. And our customers agree. A full 87% of business owners we surveyed reported higher numbers of NFC transactions and told us that contactless payments were fast, easy and safe.

Contactless payments drive business efficiencies and there are many good reasons to encourage customers to pay with a tap. Plus, business owners don’t have to worry about any increased costs. Transaction rates for NFC contactless payments— whether by card or by phone—are the same as traditional swiped and dipped payments.

Safe and Secure

The idea of paying for something with just a wave of a card or device may make some people uncomfortable. Consumers want to ensure that their data – and their money – can’t be stolen. Merchants want to protect their data as well.

Unlike the mag-stripe technology on the back of traditional credit cards—which was developed in the 1960’s—NFC payments are considered to be extremely secure. NFC uses advanced technology that only the receiving terminal can read. The data involved in an NFC payment transaction is encrypted and dynamic so, unlike the data on a magnetic stripe, it’s difficult to hack and always changing.

Making payments from a smartphone is one of the most secure ways to pay. In addition to NFC security, most mobile wallets have a secondary form of verification – such as a fingerprint scan– that significantly limits the risk of anybody but the device owner using it to complete mobile payments. The leading wallets apps from Apple, Android and Samsung replace actual card details stored on the device or in the cloud with tokens, making them completely useless to fraudsters.

All-in-One Acceptance

The way customers pay comes down to choice, and merchants should be ready to accept payments no matter how they are presented: via mag-stripe card swipe, EMV card insert, or the tap of an NFC card, smartphone or wearable device. Using an all-in-one customer-facing terminal allows patrons to choose their preferred payment method, and keeps staff and customers safe.

PayJunction’s Smart Terminals are automatically enabled to accept NFC and contactless payments via EMV cards and digital wallets. The NFC reader on our ZeroTouch Terminal is intuitively located in the center of the large display, reducing customer confusion and speeding the checkout process.

Get a free ZeroTouch Terminal and start accepting NFC today!

If you currently have an NFC-enabled terminal, have you seen an increase in NFC payments recently? Tell us in the comments section below!


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PayJunction Team

Content written by the PayJunction team encompasses broad business topics including marketing, brick-and-mortar business operations and management.

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