Businesses that conduct in-person transactions should consider accepting NFC payments, a contactless payment method that has taken over the checkout experience in recent years.

NFC technology allows businesses to quickly and easily accept payments from customers anywhere that they do business, with optimal mobility and security. It’s also compatible with digital wallets, including Apple Pay and Google Pay, which are quickly becoming highly preferred payment methods. A study found that by 2020 there were more than 2.6 billion unique digital wallet users worldwide, a number that’s projected to grow to 4.4 billion by 2025.

So what does it take for your business to accept NFC mobile payments and offer a contactless customer experience?

What's in this article?

• What are NFC contactless payments?
  
• How do contactless NFC payments work?
  
• How to accept contactless NFC payments from customers
  
• Benefits of accepting contactless NFC payments from customers
  

What are NFC contactless payments?

Near-field communication (NFC) securely enables some credit cards and mobile devices – such as smartphones and smart watches – to submit payments to card readers and payment terminals without physically making contact.

Contactless NFC payments occurred exponentially more frequently during the pandemic, supercharging a trend that was already on the rise. Customers are enthusiastic about contactless payments, and businesses have been meeting this demand. A 2021 Raydiant study found that 64% of consumers were concerned about the cleanliness of credit card payments, and 57% said that they were more likely to buy from businesses that offer contactless payment options. In 2021, 67% of businesses were set up to accept NFC payments, and this number has continued to grow.

How do contactless NFC payments work?

NFC payments occur when customers hold an NFC-enabled device or card in close proximity to a card reader or payment terminal that also has NFC capabilities. After a quick tap or a close hover (usually no more than a few centimetres away), payment details are transmitted by radio frequency, and the transaction is completed quickly and securely. NFC technology enables any mobile wallet app, such as Apple Pay and Google Pay, as well as credit cards that are equipped with a "tap to pay" option.

When customers use digital wallets to pay for purchases, they must unlock the NFC payment app (using facial recognition, fingerprint identification, or a PIN code), select the stored payment method that they want to use and hold their device close to the contactless card reader or payment terminal. These actions only take a few seconds at the point of sale.

NFC-enabled devices and payment readers exchange payment data using unique, one-off codes instead of actual card numbers. This encryption makes NFC payments vastly more secure than swiping the magnetic stripe ("magstripe") on a credit or debit card. Magstripes contain the card number data, making them more vulnerable to data breaches and card fraud. NFC-powered transactions have a similar kind of encryption as EMV chip cards, which were developed before NFC to mitigate fraud risk.

How to accept contactless NFC payments from customers

Most modern card readers and point of sale (POS) terminals are NFC-enabled. If you already accept other types of in-person payments using these devices, it might be simple to start accepting NFC payments. Your payments processing provider should be able to explain how NFC payments work on your existing payments hardware or let you know if you’ll need to upgrade to new hardware.

If your business is still at an early stage, and you're not accepting in-person payments yet, you might need to take a few extra steps. Before you can start accepting NFC contactless payments – or any credit or debit card payments – you'll first need to open a merchant account and get started with a merchant service provider that can process your payments and issue POS and card-reading hardware.

Benefits of accepting contactless NFC payments from customers

Any customer-facing business that processes in-person transactions would strongly benefit from accepting contactless NFC payments. Here are a few benefits of an NFC payment system:

Fast and easy

Convenience is the top reason for which customers like contactless payments. Forty-seven percent of survey respondents said that they prefer NFC mobile payment options because they are faster and easier than using credit cards or cash. Cutting down on checkout times means an overall improvement in the customer experience, for the customer who is checking out and for all the customers waiting behind them.

Widely used

Many customers strongly prefer contactless payments and choose which businesses to patronise based on who accepts them. The Raydiant study found that 80% of consumers used contactless payment in the previous 12 months, with 35% saying that they made a contactless transaction almost every time that they made a purchase.

Secure

Sensitive details like credit card numbers and customer names are encrypted during NFC transactions, and the extremely small distance between the contactless card reader and payment device makes it highly unlikely that anyone could intercept the NFC transaction while it’s in progress. Even if a would-be thief managed to steal the payment data, encryption would make it difficult for them to use it.