Selecting a payment processing solution can be overwhelming. With a variety of choices available, it can be hard for a merchant to pin point which solution would work best for their business. Operating a standard cash register is fairly easy and in the past has been the most common form for payment processing. However, some of the more recent innovations within the payment industry may not be as familiar.
One relatively new method to pay at retail stores within the U.S. is Near Field Communication (NFC). NFC technology uses chips that are embedded in smartphones and functions as a segment of a wireless link. Once initiated by another chip device, it can transfer small quantities of data by being held just a few centimeters away from a terminal.
1. Contactless payments: Contactless payments authorize payment transactions through a variety of solutions – contactless chip cards, mobile phones, and key fobs are just a few to name. This type of technology uses a chip, which communicates with a reader device that uses NFC. Contactless payments are also commonly referred as “tap and go” or “wave and pay”.
What are the benefits of using contactless payments? The solution is convenience and speed. According to Smart Card Alliance:
- Using contactless payments reduced the amount of time at the POS by 30 to 40 percent.
- Contactless transactions showed to be 63% quicker than using cash.
- Contactless transactions proved to be 53% faster than a traditional credit card.
- Using contactless payments over cash showed a 20 to 30 percent increase of spending more per transaction.
2. Mobile wallets: Mobile wallets are another form of NFC enabled technology that has expanded the past year. Mobile wallets allow consumers to use their smartphone as a way to pay for items. Essentially, consumers input their payment card information on their smartphone and the necessary data is transmitted via a reader to the POS terminal. The top three mobile wallets that have gained recognition include Apple Pay, Android Pay, and Samsung Pay.
3. Tokenization: Security is a major issue within the payment industry and many merchants may wonder how NFC is safe. Mobile wallets protect payment information and consumers’ credentials via tokenization. Tokenization takes the payment information and replaces it with non-sensitive data, such as letters or symbols, and converts it to a random sequence of tokens. These random letters and numbers help heighten protection and security for the consumer. Tokenization works to protect NFC technology, mobile payment applications, as well as credit card payments.
As NFC technology continues to gain traction, more business owners may consider implementing NFC capable terminals for their business. NFC provides a variety of security solutions and is breaking ground as mobile payments become more popular with consumers. Merchants can gain a better understanding of NFC technology by learning more about the terminology of contactless payments, mobile wallets, and tokenization.
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