Payment Terms Defined: Near Field Communication

Near field communication (NFC) is a term that has surfaced recently in the payments industry, generally as part of a discussion of mobile payments and digital wallets.  

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Payment Terms Defined: Near Field Communication

May 31, 2017

Payment Terms Defined: Near Field Communication

Near field communication (NFC) is a term that has surfaced recently in the payments industry, generally as part of a discussion of mobile payments and digital wallets. NFC figures prominently in the development of these new credit card processing technologies.

Near field communication is a set of standards for smartphones, tablets and similar devices equipped with an NFC chip to establish short range wireless communication with each other. It can support any service that relies on transmitting and authenticating data, including credit card processing. The technology is also embedded in commuter cards, print advertisements and smart cards.

The NFC payment process unfolds as follows at the point of sale (POS): The consumer launches the payment app on their smartphone and then taps or waves the phone close to the contactless NFC payment receiver. Once the connection has been made, the consumer scans their finger or enters a passcode to approve the transaction. A second chip called the secure element (SE) relays the authorization back to the NFC receiver, validating the transaction.

Many major retailers currently offer the NFC payment option at the POS, and it is expected that increasing numbers of merchants will eventually adopt the technology. Industry publication Mobile Payments Today included NFC on its list of mobile payments trends to watch in 2017. "Millennials will lead the charge to do away with credit cards and opt for the easy and seamless experience of mobile wallets," Scott Blum reported in his December 2016 post, noting that mobile wallets will exceed consumer expectations for convenience in 2017. "With all the major players in the mobile device industry having delivered their own version of the mobile wallet (e.g. Apple Pay™, Android Pay™, Samsung Pay™), and Apple Pay alone reporting a growth of one million new users per week, this technology will continue to convert users in the coming year."

What can NFC do for your business? It can meet consumer demand, allowing your customers to pay as they prefer. NFC can make transactions more convenient for your customers and speed up transaction time, reducing the time shoppers wait on line and enabling you to handle more transactions in the same amount of time. And, NFC has built-in capabilities that support secure applications. A random and unique code is used for each transaction, making it more secure for the merchant and the customer.

If you're ready to put NFC to work for your business, TSYS Merchant SolutionsSM can help you upgrade your system to accept both NFC and EMV®. Contact us today to find the solution that best suits your business needs.

All trademarks contained herein are the sole and exclusive property of their respective owners. Any such use of those marks without the express written permission of their owner is prohibited. Apple Pay is a trademark of Apple, Inc. Android Pay is a trademark of Google Inc. Samsung Pay is a trademark of Samsung Electronics Co., Ltd. EMV is a registered trademark or trademark of EMVCo LLC in the United States and other countries. www.emvco.com.

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