Each year, fewer Canadians are carrying cash and instead are opting to pay with different types of payment cards and a wide range of digital payment methods that offer greater speed and security during the transaction process. Near-field communication is a technology that has accelerated these trends and made payments easier and more secure for customers and businesses alike.
Retailers across Canada have been experiencing a significant shift away from customers paying with physical cash for many years, as the convenience and security of paying for transactions using credit cards, debit cards, and digital wallets make these modern payment methods far more appealing. This should come as no surprise, as the simplicity and speed of using a tap-to-pay card sure beats fumbling with cash and coins for everyone involved. But really, what is an NFC payment, and how does this innovative technology actually work?
You’ll find NFC terminals at checkout counters and payment kiosks in businesses of all types, from unattended vending stations to large-scale retailers and everything in between. You can identify these types of payment terminals thanks to the universal NFC logo, which conveniently can also be found on compatible payment cards and mobile payment devices.
This logo indicates that you can use tap-to-pay cards and digital wallets at this particular merchant in order to complete your cashless transaction. Let’s take a closer look at how NFC cards and digital wallets work to authorize these types of transactions, and the different steps that take place behind the scenes.
What is NFC Payment Technology?
NFC stands for ‘near-field communication’, which really means the ability to send and receive information wirelessly between two objects. Quite simply, NFC tap and pay systems work by transmitting the payment details from the customers’ card or digital wallet to the payment terminal using an encrypted wireless signal. Once the payment information is received, the secure transaction data is sent to the related financial institutions for verification and approval. Once verified and approved, the merchant terminal then receives the information back and completes the transaction. This entire process occurs in just mere seconds, making it the fastest and most efficient way to process a payment.
All a customer needs to do is to place their payment card or digital wallet device within close proximity to the NFC payment terminal, and the signal is transmitted automatically with no direct contact or physical interaction between the two objects. Wireless data transmission has the added benefit of reducing the number of touch-points at the checkout station in retail locations, which has become particularly relevant due to the COVID-19 pandemic. Any extra measure that a business can take to provide a safer and more sanitary shopping experience for customers is definitely worth doing, and is noted by health authorities as a helpful step in our efforts to stop the spread of the virus.
In addition to being extremely fast, NFC payments are also highly secure against data theft and transaction fraud. You see, with traditional magnetic stripe cards the account information contained on the card itself is static, meaning that it is the same information transmitted in the same format each time the card is swiped. This means that if a skimmer or data thief is able to obtain this information, they can potentially use it to create other fraudulent transactions.
With an NFC payment, the account information transmitted by the customer card is encrypted using a unique format with each transaction. Even if a data thief was able to obtain the information from an NFC transaction, it would be useless to them as it is only valid for that single transaction. Any duplicate transactions that were created using the same data would never be successfully processed.
Thanks to these advantages, NFC tap-to-pay technology has rapidly gained popularity across Canada and the rest of the world. In fact, the number of retailers accepting contactless payments jumped 40% between 2019 and 2020, and this trend shows absolutely no signs of slowing. Customers value the added speed and security of NFC payments, and businesses certainly appreciate the efficiency gains in the checkout process and the reduced risks of transaction fraud that this technology provides.
One of the driving forces behind such rapid adoption of NFC payment technology is the ability to pay with a tap using digital wallets and payment apps that are loaded onto our smartphones and connected mobile devices.
What is NFC on My Phone?
Nearly all recently produced smartphones and internet-connected tablets will feature integrated NFC technology that can be used with digital payment apps such as Google Pay, Apple Pay, and others. Just like you would use a credit or debit payment card, you can access the appropriate payment app on your phone and then use your mobile device in place of a debit or credit card to tap and pay and complete a transaction. The technology functions in exactly the same way to create fast and secure NFC mobile payments, with the added advantage of customers not needing to carry multiple different payment cards in their wallets and purses.
What Does Growing NFC Payment Adoption Mean for Business?
In short, the increasing preference of consumers to use contactless NFC payments will have a big impact on the futures of many businesses if they do not actively prepare for the future. Recent statistics from Mastercard show that nearly 8 in 10 consumers report using contactless payments regularly. In addition, they report that 80% of contactless NFC transactions are in the under-$25 transaction segment, which traditionally is a segment ruled by cash. Furthermore, studies also show that cash use is declining across the board at a rapid pace, with projections of yet another 5% drop in retail payments using cash by 2023.
Equip Your Business for Success with NFC Payment Terminals
If your company is currently operating with credit and debit card terminals that rely on swiping or chip-and-PIN to process transactions, you would be wise to invest in an upgraded point-of-sale solution that adds NFC and tap-to-pay capabilities to your checkouts. There is a wide range of different POS systems your business can select from depending on the unique needs of your operations, and what your long-term growth plans might be.
The Clover Station Duo is a powerful all-in-one POS station that features robust payment processing capabilities along with a host of business management functionality to help your operations gain efficiency, boost the productivity of your team, and elevate profitability with a better overall customer experience. You can access real-time business data, inventory controls, employee scheduling, sales performance, product information, and detailed reports that will help you make smarter and more impactful business decisions, driving your success forward.
For a space-saving solution ideal for satellite customer service stations in other locations in your business, the Clover Mini offers full POS capability in a compact form factor. Modular additions to the Clover Mini can expand its utility with features such as receipt printing, cash drawer access, barcode scanners, weight scales, and so much more. Plus, you can customize your Clover Mini with a diverse range of business apps to help your team do more and provide an enhanced customer checkout experience.
If your business requires the greatest amount of flexibility in your POS system, the Clover Flex is the perfect portable payment solution to allow payments from anywhere, any time. This mobile point-of-sale terminal processes all types of NFC payments right where your customers are, such as at restaurant tables or on patios. With the Clover Flex, your checkout counter is anywhere your team needs it to be, increasing the speed of the checkout process for customers and adding greater convenience to their shopping experience.
Give Your Business the NFC Payments Advantage with MONEXgroup
The advantages of NFC payments are clear to see, so if your business is ready to take the next step in implementing a new state-of-the-art NFC point-of-sale system, contact the team here at MONEXgroup today. Our experts will work directly with you to ensure that your business is equipped with the right NFC payment solution to accelerate your success and deliver a best-in-class checkout experience for your customers. Plus, you’ll receive complete 24/7/365 customer service and technical support to give you an added edge over the competition.
NFC payments are the new standard, so make sure your business is ready to win with the best technology and the right payment processing partner – MONEXgroup.
Author: Layal Scheirich, Head of Sales at MONEXgroup
Bio: With 18 years of experience in payment processing and merchant services, Layal has seen in-store POS technology evolve from its humble beginnings to contactless, unattended, mobile and online alternatives. Today, Layal is an inspiration to the MONEXgroup’s team and a go-to source of information related to payment processing. She is enthusiastic to share her knowledge with audiences interested in cutting-edge technologies available today, such as unattended payment for self-serve kiosks, e-commerce online payment gateways, virtual terminals, and contactless and mobile payment solutions.
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