What is NFC Credit Card Processing?
In the world of payment processing, it seems there is an endless amount of ‘language’ specifically associated with the field. NFC (near-field communication), is one of the newer terms to break onto the scene of payment processing. Some think of the NFC compatible processor as an ‘NFC credit card machine’, ‘contactless payment system’ or ‘contactless reader.’
How NFC Works:
NFC technology allows two local devices to exchange data, of course, both devices must be equipped with an NFC chip in order for this to work. In relation to credit card processing, the exchange of data is considered to be one-way communication. There needs to be one powered device, a credit card reader, that reads and writes to an NFC chip, that can be located in a credit card, or NFC- equipped phone or tablet. When a customer taps their NFC-equipped device to a credit card machine with NFC capability the transaction is completed.
How Identity Remains Protected:
Some of the larger concerns around NFC payments are security. However, the structures of mobile payments are complex, thwarting most hacking or intercepting. As a retailer, once your customer launches their payment application via phone or tablet, the device taps the terminal and a connection is made using NFC. The customer will usually be asked to scan a finger or enter a code to approve the transaction. The transaction goes through one final step, a validation through a separate chip called the secure element or SE. Information is then relayed back to the NFC modem, and the payment finishes processing in the same way a traditional swipe transaction would.
Benefits to Using a Credit Card Machine with NFC Capability:
The benefits of using NFC payment processing promotes several components for the consumer: ease of use, safety and security, and flexibility. Having happy consumers is a plus for any business owner. Waving a card or phone within proximity of an NFC-capable credit card machine is even more convenient than swiping a card. Aside from safety and security measures with encryption and dynamic data technologies built into an NFC capable device or card; leaving a card behind or having it stolen during a transaction is no longer a factor. As with an EMV card, NFC also reduces the chance of having your information “skimmed” from the cards magnetic-stripe. The flexibility of using a device for payment and not always a traditional card has become attractive to many consumers. NFC capabilities are being included in phones, wallets, even key fobs.
Can Retailers Benefit from NFC Payments?
Consumers are not the only beneficiaries of NFC payments. Retailers benefit from operational efficiency and competitive differentiation. According to some research, contactless transactions are faster than both cash and conventional card transactions. A huge advantage for businesses: higher customer satisfaction, shorter lines, and even less personal needed at peak times. Consumers who use NFC-compatible payment devices have been shown to display a stronger loyalty to retailers who accept NFC payments. This form of payment is predicted to rise among young and affluent consumers.
Using a credit card machine with NFC capabilities seems like a win-win for both merchants and consumers. With stronger identity protection, faster check out, and brand loyalty as a few of the possible gains for both parties. Upgrading to an NFC-compatible payment processor is easy and a cost-effective form of payment processing, making the switch favorable to many merchants.