NFC which is a short form for Near Field Communication is a technology that facilitates information sharing between two devices when placed close to each other and is often used for contactless payments.
One of the examples of this technology is the WIFI-enabled credit/debit cards which when brought into proximity to a POS device allow for instant transactions to take place cardless EMI.
How Do NFC Payments Work?
Whenever a payment and a reader device are placed within proximity and activated, encrypted data is exchanged between the two NFC chips to complete the transaction. This is made possible due to the use of a specific radio frequency, i.e., 13.56 MHz
It is both secure, and a much faster checkout method compared to dipping the card and entering a PIN to complete a transaction. This lightning-fast transaction and convenience have made NFC payments one of the most preferred payment methods among consumers.
Benefits of NFC Payments
There are many benefits of accepting payments through NFC, let’s have a look!
- Lightning-Fast Checkout: NFC payments are almost 10 times faster than all other types of in-person payment methods. This allows for more transactions to go through within a shorter period promoting lesser queues and reducing wait times for customers.
- Provides Better Customer Experience: Customers prefer to pay using methods that take the shortest time allowing them to save time and effort. As mentioned above, more transactions taking place in a shorter period allow the consumer to be on their way faster without having to spend too much time waiting for their turn to pay bills. This enhanced experience helps a business generate repeat sales and better customer retention.
- Secure Transactions: NFC technology is considered to be much safer than swiping cards, as there are fewer chances of in-person fraud. Since NFC-based cards can be switched on and off using an app, the chances of someone using a lost card to make fraudulent transactions are significantly reduced.
- Brand Positioning and Increased Revenues: Brands can opt-in for cobranded NFC cards that will give them an edge over the competition. Introducing more premium features such as metal cards, cash backs, etc. can help build a stronger brand positioning in the market and increase revenues for the business.
- Helps in Energy Conservation: NFC needs very little power to complete transactions making it a great option for businesses that witness rush and may need a solution that has very little battery drain. This is because the last thing a business would want is to run out of battery on their POS devices at peak hours.
- Now that we have had a look at a few of the benefits of NFC payments, let’s have a look at a few of its drawbacks!
Drawbacks of NFC Payments
- It’s an Expensive Technology: Since NFC is a still relatively new technology, not every business may find it feasible to invest and integrate the technology into their system as the cost of the software and hardware is relatively higher.
- Lack Of Availability: Since the technology is new, and smaller businesses are less likely to invest in it, customers may not find NFC readers readily available across stores. This is in spite of the fact that both Apple Pay and Google Pay are becoming increasingly popular by the day.
However, the positives far outweigh the negatives when it comes to NFC payments, and as the technology becomes more affordable, more businesses will likely start investing in it.
It’s can be arguably said, that NFC payments apps are going to be the future of in-person payments given that no other technology comes even close to the lightning-fast transactions, and the overall convenience that it offers!