Dapio Blog

NFC payments 101

In the wide and luscious landscape of mobile payments, the NFC feature has a special place. NFC has emerged to address the consumer’s need for faster payments and the merchant’s need for quicker and easier payment processing.

What are NFC payments?

This payment type uses contactless technology to make payments. Names near-field communication (NFC), this technology enables data exchange between readers and payment devices such as tap-to-pay cards or e-wallets. You can use an e-wallet (e.g. Google Pay, Apple Pay) present in a smart device (smartphone, smartwatch).

In order to work, NFC payments require that the paying device and reader are in proximity (approximately 2 inches apart). NFC payments became popular due to them being contactless and encrypted, which translates into increased security and a faster checkout process. This payment type requires a specialized reader, which can be found with most merchants, due to the increase in contactless payments popularity.

NFC payments: benefits

How do NFC payments work?

Similar to radio-frequency identification (RFID) and Bluetooth technologies, NFC is more limited than the former since it must be used in proximity to the reader and gains the upper hand on the latter since NFC doesn’t require manual device discovery and syncing, and uses less power.

According to FIS Global, NFC technology can be used in three different ways:

  • P2P (peer-to-peer): two devices with NFC technology can be linked for data sharing.
  • Read/write: a phone can register data from a passive device that can’t read information by itself.
  • Card emulation: perhaps the way that NFC tech is used most, through card emulation, you can use an NFC device like a contactless card.

Combining NFC with SoftPOS technology

Businesses that wished to improve customer experience and drive customer engagement started to incorporate NFC technology alongside SoftPOS technology. Where do they both meet?
For example, if we were to look at Paymob, we can see that its SoftPOS solution goes hand in hand with its Tap-to-Phone technology. A Visa-designed feature, Tap-to-Phone allows merchants to use their phones to accept NFC payments. Through Tap-to-Phone merchants remove the need for connecting additional devices and external hardware which translates into a faster payment experience for both the customer and the merchant.

The bottom line

Mobile payments are becoming the new normal because more in more consumers are getting used to pay by smartphone and customer expectations are on the rise. Through NFC technology, customers benefit from a better experience as they have every payment method available at checkout, the payment process is quicker, and because NFC payments are encrypted, improved security is ensured.