NFC technology allows businesses to accept payments from customers anywhere they do business – quickly, easily and securely. NFC technology is also compatible with digital wallets, including Apple Pay and Google Pay, which are quickly becoming highly preferred payment methods. Global digital wallet adoption surpassed 52% in 2024, a number that's projected to grow 15.3% by 2029.
Below, we'll explain what it takes for your business to accept NFC payments and offer a contactless customer experience.
What's in this article?
- What are contactless NFC payments?
- How do contactless NFC payments work?
- How to accept contactless NFC payments from customers
- Benefits of accepting contactless NFC payments from customers
- What security measures do NFC payments incorporate?
- How Stripe Payments can help
What are contactless NFC payments?
Contactless NFC payments use near-field communication (NFC) technology to transmit encrypted payment data from credit cards and mobile devices, such as smartphones and smart watches, to card readers and payment terminals without making physical contact. Android and iPhone devices support NFC.
The COVID-19 pandemic boosted the trend of contactless payments, and businesses continue to adapt to meet customers' demand for this type of payment.
How do contactless NFC payments work?
To make an NFC payment, a customer holds an NFC-enabled card or device in close proximity to a card reader or payment terminal that also has NFC capabilities. Here's how it works:
- The customer holds their card, smartphone or smartwatch close to a card reader or payment terminal with NFC capabilities.
- The NFC chip in the device sends encrypted payment details to the terminal.
- The terminal processes the payment and sends confirmation back to the NFC device.
Payment details are transmitted by radio frequency, and the transaction is completed quickly and securely. NFC technology powers digital wallets 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 wallet app (using facial recognition, fingerprint identification or a pin code), select the stored payment method they want to use, and hold their device close to the 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-time codes instead of card numbers. This encryption makes NFC payments much more secure than swiping the magnetic stripe ("magstripe") on a credit or debit card. Magstripes contain the card number data, which means they are 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 against 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, accepting NFC payments can be a simple process. 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 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 can benefit from accepting contactless NFC payments. Benefits of accepting NFC payments include:
Fast and easy
Convenience is the top benefit of using contactless payments. Tapping a card, phone or watch is generally quicker than inserting a chip card. Making checkout faster means improving the overall customer experience, for the customer who is paying 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. In the UK, for example, 93.4% of in-store transactions up to £100 were contactless in 2023 – and even a majority of customers between the ages of 85 and 95 pay with contactless.
What security measures do NFC payments incorporate?
NFC payments include built-in security features to prevent fraudulent transactions. Here are the main security measures of this payment type:
Encryption: NFC payment data is encrypted during transmission so the data is unreadable to anyone who might intercept it.
Tokenization: Sensitive payment details, such as card numbers, are replaced with a unique token that can’t be traced back to the original number.
Two-factor authentication (2FA): NFC payments made using a smartphone or watch typically require 2FA in the form of a passcode, fingerprint, or facial recognition to confirm the right person is initiating the transaction.
Secure elements: Mobile devices store payment credentials in a secure chip or within a trusted execution environment isolated from the main operating system. This protects sensitive payment information if someone gets unauthorized access to the device.
Transaction limits: Many banks and financial institutions limit daily NFC transactions to prevent large fraudulent transactions if a card or device is stolen.
How Stripe Payments can help
Stripe Payments provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.
Stripe Payments can help you:
- Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 100+ payment methods, and Link, Stripe’s digital wallet.
- Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.
- Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.
- Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.
- Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% uptime and industry-leading reliability.
Learn more about how Stripe Payments can power your online and in-person payments, or get started today.
The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accuracy, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent lawyer or accountant licensed to practise in your jurisdiction for advice on your particular situation.