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NFC mobile payments are contactless digital payments where mobile wallets or NFC-enabled credit cards communicate with special card readers. NFC technology allows businesses to accept customer payments quickly and conveniently without requiring employees to handle cards.
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NFC mobile payments are an ideal payment processing option for many businesses, including retailers, restaurants and professional service providers. If your business is considering accepting NFC mobile payments, read on for details on how these transactions work, what’s involved, and their pros and cons.
Businesses that accept NFC payments should expect to pay standard credit card processing fees – a few cents per transaction plus a small percentage of the transaction value.
NFC stands for “near-field communication.” This technology enables communication and data sharing between wireless-enabled devices in close proximity. NFC has many applications, including key fobs for access control systems, ID verification and wireless device pairing.
NFC is a straightforward technology. Accepting NFC mobile payments is much like accepting traditional credit cards with magnetic stripes. In traditional credit card transactions, the credit card machine reads the card’s magnetic stripe. In contrast, in NFC transactions, an NFC reader sends a signal picked up by an NFC antenna on an NFC-enabled device.
NFC payments require an NFC-enabled card reader. When this reader is initiated through a point-of-sale (POS) system, it sends a signal that searches for an NFC-enabled payment device. When the reader detects the antenna of an NFC-enabled device, such as a phone or NFC-enabled credit card, the payment device communicates the payment info to the reader, and the payment is processed.
While most of the best credit card readers are NFC-enabled, some businesses may need to purchase a dedicated NFC-capable credit card machine for $50 to $150.
Preparing your business to accept NFC mobile payments is relatively straightforward. After choosing a payment processor that supports NFC-enabled technology, you’ll need to set up a merchant account with its bank or processing company, connect the card reader and begin accepting payments.
These are the six primary steps you’ll take to set up NFC payments:
After processing payments using an NFC reader, the proceeds will go directly into your merchant account, just like typical credit card transactions. Often, these proceeds are transferred into your business bank account automatically the following day, but you may need to initiate transfers periodically to sweep your balance.
Most of the best credit card processors support NFC mobile payments via mobile wallets like Apple Pay and NFC-enabled cards. The right processor for your business will facilitate your customers’ preferred payment methods and charge reasonable fees.
Here’s a look at some top processors to consider when you want to accept NFC mobile payments:
If you’re a high-risk business seeking credit card processing services, prepare your financial statements, banking records, and tax returns, and apply with a processor open to your situation or industry.
NFC payments are an excellent option for many different types of businesses. They are rarely the only option offered, but they’re a great benefit for most customers and convenient for employees – especially businesses like retailers that process multiple payments daily.
If you already accept credit cards, supporting NFC payments is a logical next step. However, if you are a consultant or operate a cash business, NFC may not be helpful.
Businesses that want to process payments using NFC will need an NFC reader. Once the reader is connected to the POS system, businesses can allow customers to pay for transactions using several devices.
NFC payments are generally considered safe. The technology is every bit as secure as typical mobile credit card processing. However, there are payment fraud and hacking risks to consider.
Because of the risk of fraud or hacking – and because they rely on a wireless signal – NFC mobile payments are considered slightly less secure than other payment methods, including traditional swipe transactions. However, NFC devices with multifactor authentication reduce security risks.
Here’s a look at the primary advantages and drawbacks of using NFC mobile payments.
Whether you own a downtown clothing boutique, a bustling restaurant chain or a dental office serving a steady stream of patients, accepting NFC payments can benefit your business. If you’re ready to jump in and try something new, remember that NFC transactions often utilize the same equipment as traditional credit card processing services. This mode of payment acceptance toggles well with various devices like smartphones, tablets and smartwatches.
Before getting started, ensure you do your research on processors and find an option that best offsets risks like fraud, hacking and user error. When you feel ready to move forward with accepting NFC payments, you and your customers will likely appreciate the flexibility this option affords.
Elizabeth Crumbly contributed to this article.