Everything You Need to Know About NFC Mobile Payments

What is an NFC mobile payment?

NFC – or near-field communication – enables wireless communication between a card or mobile device, and card terminals and other payment devices. If you have a credit card with a symbol on it that looks like a signal, it has NFC capability and you can use it to pay just by tapping it on a compatible card reader. In addition to NFC-enabled credit cards, a number of companies have created payment types using NFC that allow a buyer to use their mobile phone to complete a purchase. It is these smartphone NFC payment capabilities – also called digital wallets – that we will discuss in detail.

Digital wallets are among the fastest-growing payment methods. The Global Payments Report 2023 revealed that about one-third (32 percent) of all point-of-sale payments were made using digital wallets, with a compound annual growth rate (CAGR) of 15 percent through 2026. Digital wallets can also be used online, and they currently account for 49 percent of all e-commerce transactions – double that of credit cards. If you have a multichannel business, accepting NFC mobile payments can pay dividends by increasing your e-commerce sales.

How does an NFC payment work?

NFC takes advantage of the radio frequency waves that mobile phones already use. These waves only work at close distances: usually within two inches from the phone to a reader or other payment device. Some payment providers even let merchants accept NFC mobile payments with their own mobile smartphone or tablet. The short distance ensures that a customer is not unwittingly paying for the purchases of someone behind them in line, so it has that element of built-in security.

When a customer signs up with one of the NFC payment providers, they would type in their bank account and credit or debit card information into a secure form. This information would then be encrypted and stored on the provider’s server, not in the customer’s phone. They would then download an app and log into it with their credentials. When ready to make a purchase, they would just bring their mobile phone near the reader and the payment would be initiated in seconds.

Are NFC mobile payments secure?

NFC payments are wireless, which may make some people uncomfortable about the security of their information. However, these payment types are actually safer than magnetic stripe cards and have about the same level of security as EMV or chip cards.

It works so well because NFC uses dynamic encryption. Each time a customer pays using NFC, the system assigns a different random string of numbers and letters that tells the merchant services provider how to access money in the customer’s account for the purchase. Since it is a different code each time, it is nearly impossible to decode and useless for future purchases even if it was somehow deciphered.

From a customer’s point of view, NFC mobile payments have an additional level of protection because they are accessed only with a unique login and password, or biometric such as Apple’s FaceID. That means that even if a customer loses their phone, the NFC data cannot be accessed.

What are the pros and cons of accepting NFC payments?

Consider these pros and cons when deciding whether to accept NFC mobile payments at your business.

Pros of accepting NFC payments

• They have a high level of security.
• They enable quick transactions.
• They’re convenient for customers.
• It takes less power to complete the transaction when you accept payment via a mobile device.
• They enhance the checkout experience for customers.
• Millennial and Generation Z consumers widely use them.
• There are no surcharges from mobile wallet providers. You are only required to pay the credit card processing rate for the mobile wallet provider the customer has selected – if more than one payment method is offered in the app.

Cons of accepting NFC payments

• You’ll need to purchase NFC-enabled card readers for a high volume of transactions.
• You’ll need to find a credit card processor that allows you to accept various NFC mobile payment providers.

What are the best NFC mobile payment apps?

Consumers have a handful of major NFC payment providers to choose from. If you want to use one for yourself, consider the brand of mobile device you own or the multiple digital wallets you use on a regular basis.

Apple Pay

Apple Pay is preloaded on all iPhones, iPads and Apple Watches, so customers have no need to download an app for it. In terms of the number of customers using it, Apple Pay is the top NFC digital wallet, with over 500 million users worldwide.

Patrons can store up to 12 cards in Apple Pay to choose from when paying. Apple Pay uses a system called tokenization in which even Apple does not have an unencrypted copy of customers’ payment information; encryption happens at the issuing-bank level. This, combined with FaceID authentication, makes Apple Pay the most secure of the NFC mobile payment apps. [Read related article: How to Accept Apple Pay]

Google Pay

Formerly known as Android Pay, Google Pay is available on both Android and iOS devices. Google Pay has 25 million monthly active users in the United States, thus ranking as the No. 2 U.S. digital wallet. Google Pay has a variety of features that help customers keep track of their finances. Google Pay is mostly used in the U.S. and India.

Samsung Pay

Samsung Pay is the smallest of the major mobile wallets – with 16.3 million American users – and is projected to grow its user base more slowly than the above two options.

What are the best credit card processors that accept NFC mobile payments?

If you already accept credit cards, your payment processor can enable you to accept NFC mobile payments. If you do not currently accept credit cards, you can open a business account with PayPal or Square, since both companies accept multiple NFC mobile payment providers. Here are some of our credit card processor best picks and the NFC mobile payments they accept:

• Clover accepts Apple Pay, Google Pay and Samsung Pay with its Go mobile reader, Flex reader, Mini POS and Station Solo POS system. Learn more in our Clover review.
• Merchant One accepts Apple Pay, Google Pay and Samsung Pay, and sells Clover card readers and POS systems. Learn more in our Merchant One review.
• Stax accepts Apple Pay and Google Pay payments in-person with its NFC-enabled terminals. It also permits online payments via mobile wallets as well. Learn more in our Stax review.
• ProMerchant accepts Apple Pay and other NFC-enabled credit cards. ProMerchant’s Ingenico Desk 3500 and PAX A920 credit card terminals are free to new retailers and restaurants. Mobile companies can use the PayAnywhere credit card reader, which accepts Apple Pay and cards. Learn more in our ProMerchant review.
• Payment Depot accepts Apple Pay and Google Pay. It sells an assortment of card readers and POS equipment – including Clover, Dejavoo and SwipeSimple. Learn more in our Payment Depot review.

What are the best payment facilitators for NFC mobile payments?

Payment facilitators such as PayPal Zettle and Square allow you to accept multiple types of NFC mobile payments. Here are some details to mull over while considering these options:

• PayPal Zettle allows you to accept Apple Pay, Samsung Pay and Google Pay with the PayPal Zettle Reader 2 mobile reader, which can be used as a mobile reader or fixed reader with a charging dock. It also pairs with Zettle’s POS system.
• Square allows you to accept Apple Pay and Google Pay with its Square Reader for contactless and chip mobile reader and the Square Register POS system. If you want to use your own iPad with Square’s POS software, you can buy a stand and connect your Square Reader for an integrated solution.

Skye Schooley contributed to this article.