When looking for a new payment processing solution, there are a variety of options that it can be difficult to understand which option will work best. For instance, there are conventional payment terminals, touchscreen models, mobile point-of-sale-systems and those that accept Near-Field Communication (NFC)-based transactions.


It's not uncommon to have a fairly strong grasp of how a standard cash register works, but some of the more recent innovations in payment technology may not be as approachable as others. A relatively new way to pay at retail locations in the U.S. uses Near-Field Communication chips imbedded in cellphones and smartphones. Before investing in the new technology, we would like to offer you a couple of easy tips to understand this new form of technology and how it works.


Understand the NFC terminology


There's a lot of information about mobile payments and mPOS, and this can lead to confusion. Terminology in many cases can aid in the spread of misinformation, so it's important to understand what the different terms mean.


  • Contactless payments: An article for Diginomica helped explain that this form of payment that is fairly widespread in availability, but may not be used by consumers to the same degree that they swipe credit and debit cards. Many POS systems include contactless credit card payment options, where the shopper holds up the card to a reader that scans the payment information embedded in the card.
  • Mobile payments: This is a term that includes mobile wallets and NFC payments. One of the most recognizable forms of NFC-enabled technology is Apple Pay, as USA Today recently explained. It's Apple's branded version of Near-Field Communication that allows consumers to use their smartphones as a tool to pay for items. Essentially, shoppers can input the payment card information onto these devices, and the necessary data is transmitted through a reader to the POS terminal.
  • Security: One question that merchants might have is why this is any more advantageous than using credit or debit cards. Security is a major issue. Apple Pay in particular - in spite of the recent fraud case - protects users' credentials and payment information by tokenizing it. In other words, the system alters credit or debit card numbers and creates an account number that isn't useful to data thieves, Forbes explained.


Troy Leach, chief technology officer at the PCI Security Standards Council, went on to say that this is ideal if merchants and consumers are worried about security. The precursor to Apple Pay, Google Wallet operates in a similar way, except the information is stored in the cloud, and that potentially makes it more accessible to hackers.


Pass the information on to consumers
According to Leach, it's imperative that business owners recognize which POS systems are the most secure. In a mobile, always-on, instantly gratified consumer culture, it's likely that shoppers won't be as vigilant about protecting their financial information as business owners. Therefore, it's important to keep consumers up to date about the security of the different ways to pay.


The big-name data breaches that occurred at Target and Home Depot serve as clear examples of what can happen when hackers gain access to consumers' information. It's probably worthwhile explaining how the Apple Pay technology is one of the safest forms of payment available, especially if a significant number of customers are iPhone owners. While it's not up to business owners to sell consumers on the idea of buying a smartphone solely for the added security, it's always to a good idea to act as an authority on payments solutions.


The right solution will ultimately depend on what benefits each business and its customers. NFC technology is gaining traction in an increasing number of retail locations, and business owners will need to consider which option is most suitable.