A Comprehensive Guide on NFC Payments

 

Digital payments are ruling the market and it has changed the way business transactions are done. The process of making and receiving payments has drastically changed over the years. There are multiple modes of making digital and contactless payments today. A few clicks/tap and a couple of seconds, that’s all it takes to complete a payment process. Post-pandemic, contactless payments became essential for all! Today, it is no longer just a convenient method of payment but one of the safest ways to carry out transactions.

One such method is the Near Field Communication (NFC) mode of payment. NFC has been around since the early 2000s and it is now a popular mode of contactless payment. The ongoing pandemic impelled users to switch from cash to contactless digital payments. This gave rise to the use of NFC payments across various business industries.

 

What is NFC?

Near Field Communication (NFC) enables the secure transfer of information via phones over a short-range. When two NFC enabled devices are in close proximity, i.e. within two to four inches of distance, they can communicate with each other. To complete a transaction, the NFC chips exchange encrypted data, which is an upgrade of the Radio Frequency Identification (RFID) technology. It combines the features of a smartcard and reader interface into one device.

So, it allows the wireless exchange of data without manual synching of the devices. NFC-enabled devices carry out contactless payments via a card with the ‘tap-and-pay' method. Let us understand how NFC transactions function.

 

How do NFC Payments Work?

NFC is a similar technology to Bluetooth. But, to sync the two devices a user does not have to manually discover and connect them. NFC uses less power compared to Bluetooth. Once the reader and the payment device are close to each other and activated, users can exchange encrypted information to complete a transaction.

Radio waves help in establishing a secure contactless connection between two NFC-enabled devices. The chips used in NFC connections have an RFID frequency of 13.56 MHz that works when the two devices are held in close proximity to each other. NFC readers can only read one contactless card at a time. This feature ensures that no other device connects to the reader accidentally and makes payment for another person’s purchase.

This process makes NFC payments one of the most secure modes of making transactions. This easy, safe, and contactless process is the reason why NFC payments are now preferred by many consumers. The popular digital e-wallet payment apps also use NFC for better security. These apps use NFC readers when the user selects a payment card for any transaction.

NFC payments can be done in three different ways:

• The connection between two NFC-enabled devices enables data sharing.    

• An active device such as a smartphone can pick data from a passive device that cannot read information by itself.

• Any NFC device can be used as a contactless credit card. This is the widely used method of making NFC payments.  

 

What Are The Benefits of NFC Payments?

1. Secure Mode of Payment   

NFC payments can be made only when the reader and NFC-enabled devices are close to each other. The NFC signals cannot be hacked because the connection works when the NFC card and payment terminal are a few centimeters away from one another. Also, the security measures of a smartphone ensure better protection for NFC transactions. Additional layers of security such as phone passwords and biometric security also help to process secure, digital, and contactless payments.

 

2. Convenient and Easy to Use

We cannot stay a single minute without our smartphones. Hence, we carry it anywhere and everywhere. In fact, COVID-19 has made it an essential asset for stepping outside. After all, it facilitates contactless payments -- the mode of payment that enables social distancing! NFC payments offer greater comfort by eliminating the need of authorising transactions for small-ticket purchases. So, using NFC-enabled cards is an easy method of making instant contactless payments. 

    

3. Faster Compared to Other Modes of Payments 

Customers expect a quick and smooth checkout. Speed and flexibility of making payments through their preferred mode of transaction ensures a hassle-free experience for them. The tap and pay process is one of the quickest ways of completing transactions. NFC payments are processed within seconds, eliminating long waiting time for your customer. Overall, this mode of payment provides both parties with a faster transaction process.

 

4. Enhances Consumer and Retailer’s Experience

Earlier, exchanging cash and arranging change would result in a slow-moving line at the billing counter. Digital payment modes, in general, have been instrumental in reducing waiting time at the queue and improving the overall customer experience. But, NFC payments have kicked it up a notch! Since contactless-enabled devices do not make payment authentication a must for small-ticket bills, payments are processed in a blink. 

   

5. Easy to Implement

People often shy away from implementing advanced technology since it seems like a great deal of work. However, integrating NFC technology into your billing process is a pretty straightforward job. All you need is an NFC-enabled terminal like mPOS or an Android POS. In fact, most of the new-age payment acceptance devices come with a built-in NFC technology, making it easier for you to upgrade your payment system. 

 

Why Are NFC Payments Here To Stay?

Contactless payments have become a necessity due to the pandemic. These advanced modes of payments have been acting like an armour, protecting us from the risks involved in exchanging cash. NFC payments, especially, are easy to use, secure, and superfast in nature. Most POS terminals in India are now NFC enabled, which has encouraged the users to continue using NFC as a method of payment. Since NFC payments are safe, secure, and uber convenient, India is gradually progressing towards it.