Have you recently noticed customers standing in a queue, with their mobile phones in hand, in a grocery store during check-out? Well, that’s because they are likely to pay with Apple Pay, Samsung Pay or Android Pay. This type of “wireless” transaction is called NFC or Near Field Communication payments.
A recent report from analyst firm TrendForce has revealed that consumers across the globe will use their mobile phones to spend a total of $620 billion on all forms of mobile transactions in 2016 – a 37.8 percent increase from last year. Also, total mobile payment volumes will reach $780 billion by 2017.
Today, many retailers such as Target, Macy’s and Walgreens have already installed terminals in place to make mobile payments smooth and easy. Phones compatible with Google Wallet, along with Apple’s iPhone 6 and 6 Plus can be used against these terminals.
How NFC Works
The technology allows two devices, equipped with an NFC chip and placed within a few centimeters of each other, to exchange data. There are two kinds of communication processes that take place through NFC:
a. One-way communication: Remember how you are issued a faux credit card every time you go to the food court in your favorite mall? And, whenever you buy something from one of the eateries, the payment terminal subtracts money from your card? This happens because the terminal is powered by NFC and your credit card reads and writes the amount to the NFC chip.
b. Two-way communication: Here, two devices read and write to each other. For instance, you can touch two Android devices together, using NFC, to transfer data such as contacts, photos, audio files, etc.
Why Use NFC To Pay
This technology revolutionizes the payment structure. It safely accepts any form of payment that comes across the counter and is beneficial to both retailers and customers.
Here are three major reasons why it is worthwhile to accept NFC mobile payments now:
1. It is secure: NFC acts as a shield for customer wallets against theft and fraud. The mobile payment structure is highly complex and that makes any hacking or intercepting a difficult task. One-time tokens are created, for each transaction, that act as a stand-in for the credit card number.
Apple Pay, for instance, has a physical chip available only in the iPhone 6 and 6 Plus. This chip is the Secure Element (SE) that generates a random one-time use code number in place of the credit or debit card number.
Apple Pay also makes use of Apple’s fingerprint technology, Touch ID to restrict its access to just one person i.e. user. So even if you lose your phone, no one can access your financial credentials.
2. It is super fast: NFC mobile payments are quick. All customers have to do is hold their mobile devices close to the NFC-powered terminal/reader with their finger on the identification button to complete the process.
This is because of the advent of EMV chip cards. In December 2015, it was reported that 53% of cards processed on Square Stand were EMV chip cards, as compared to 12% in January 2015. EMV also prevents security and fraud.
3. It saves device battery: If the NFC feature on your mobile phone is on, you should turn it off to avoid the battery from secretly draining in the background. Despite this, it still uses considerably less power, unlike Bluetooth. This aspect is especially important because mobile phones may, one day, completely replace wallets.
Moreover, NFC completely eliminates the process of discovering the device, pairing it with your phone and then, entering the pass code to enable the transfer – which in turn cause the battery to drain at a fast pace. NFC provides a seamless platform to make payments.
Devices Using NFC Technology
It is available on iPhone 6, iPhone 6s, Apple Watch, iPad Pro, iPad Air 2 and iPad mini 3, including their newer versions.
Other devices using this technology are:
For retailers, especially, making secure and transparent transactions is important.
Onesto Payments, for example, offers solving payments and POS challenges of small scale businesses. The solutions provided them are perfect for all retail formats. Moreover, they protect the customers from the risk of being cheated by technology providers.
Want to learn more about keeping payments simple and smooth?
Visit the website or call on 201-546-5555 to book a free POS consultation right away!