We’re living in the future of technology – although the year 2020 doesn’t include space cars or teleportation, our technological advancements are almost indistinguishable from magic. Batteries powered by the sun, cars operating without gas, and noise cancellation – all seemingly impossible years ago. Wouldn’t it be cool, if, by the wave of a wand, you’d be able to pay for an item in any store without the hassle of swiping, inserting, or even touching a payment device? Abracadabra – it’s not magic, it’s Near-Field Communication (NFC), and it’s the ‘now’ of payments.
What is NFC?
NFC is a method of wireless data transfer that allows smartphones, laptops, tablets, and other devices to share data when in proximity. NFC technology powers contactless payments via mobile wallets like Apple Pay, Android Pay, as well as contactless credit or debit cards.
The evolution of the payment device has led to more secure transactions for merchants and for customers. NFC is the next step in this evolution, providing security plus safety. Along with standardized technical specifications, NFC can feature encryption, authentication, and other security features for both applications and devices.
Why Does it Matter?
Payment devices are at the center of the in-person retail experience. All customers purchasing items must use a payment device in order to complete their experience. It should come as no surprise then, that payment devices are a hotspot for germs and bacteria, and credit and debit cards are the dirtiest form of payments.
COVID-19 has revealed some of our biggest challenges and obstacles for retailers of all sizes. The coronavirus can survive on hard surfaces such as plastic and stainless steel for up to 72 hours and on cardboard for up to 24 hours. All businesses are learning that in order to survive, they must figure out the best practices in protecting customer health and safety.
This technology could be lifesaving, but unfortunately, the transition to NFC has been slow. In the U.S., contactless mobile payments leveraging NFC wallets at the point of sale account for only about 2% of in-store transactions. Luckily, 27% of U.S. small businesses have seen an increase in customers using services like Apple Pay, according to a survey of 361 companies released in April by the Strawhecker Group and the Electronic Transactions Association.
What is the magic of NFC?
A magician never reveals his secrets, but luckily, we’re not magicians (we’re just payments ninjas). Contactless payments have some major benefits and we want to equip you with all the information necessary to get your merchants contactless.
Security – First, and probably most importantly to payment transactions, it’s secure! We’ve already listed some of the security benefits such as encryption and authentication, but NFC goes beyond those security benefits. Consumers using NFC on their mobile phones no longer need to worry about losing a credit card, canceling it, ordering a new one, and waiting for that in the mail. All they need is their cell phone!
While it’s possible that cell phones can be lost or stolen, if passcodes or biometric protection has been activated, the device will be virtually useless to thieves.
Health – If it isn’t obvious, it’s less contact with the payment device, which means less contact with bacteria. Because contactless payments are contactless, it will reduce the transmission of COVID-19 and other viruses and improve the safety of both retailers and consumers.
“We shouldn’t be touching anything,” said Richard Crone, chief executive officer of mobile-payment research firm Crone Consulting LLC. He expects contactless payments to grab an additional 10% to 20% of transactions at stores and ATMs as the result of the pandemic.
Customer Experience – In general, consumers are demanding a quick, frictionless checkout process. If merchants want to continue doing business, they need to find the fastest and most efficient means of checkout. Consumers particularly hate waiting in lines and they value both speed and personalization. Accepting mobile and NFC payments makes checkout processes much faster and more personal making consumers much happier. Happy consumers = loyal consumers.
It’s the Future – NFC and mobile payments are here to stay! The impetus of COVID-19 has meant that many businesses have begun their payments transition, but it’s not a temporary move. In the US, 88% of all POS terminals shipped by the end of 2017 had NFC capability, and NFC-equipped POS terminals are forecast to reach 112.3 million globally by 2022.
“It’s behavior that’s going to stick after stay-at-home ends,” said Jordan McKee, an analyst at 451 Research. “There will be muscle memory about paying, and consumers will use it going around their daily life.”
NFC technology is nothing short of magic but enabling your merchant with the technology to revolutionize their business is easier than pulling a rabbit out of a hat. If you have an NFC and mobile rollout planned in the future, maybe consider expediting your deadline. Consumers are not going to wait for safer and more secure payments. Ready to transition your merchants to contactless payments? Reach out to our payments experts.
Visit our Contact-LESS landing page for more information.