Should Your Business Accept NFC (Tap and Pay) Transactions?



Ecommerce businesses are not the only ones that accept credit cards without needing to physically swipe a card. In more and more brick-and-mortar stores, customers use their digital wallet-equipped smartphones to tap near field communications (NFC) readers. These purchases have their pros and cons, which should be reviewed before you decide if accepting NFC transactions is right for your business.

The Pros

The number one benefit of NFC transactions is convenience for the customer. Few people ever leave the house without their smartphones. If someone has taken the time to input their credit card data into the device’s digital wallet app, buying something is fast and easy, with no cash or plastic necessary. The speed and ease of purchase also helps to appeal to a younger demographic of purchasers. Millennials have a lot of buying power and they have been the early adopters of this technology, expecting purchases to be almost instant and convenient.

Furthermore, NFC transactions are secure. The transaction is encrypted from start to finish and the merchant never even touches the customer’s phone, which reduces your liability.

Finally, record-keeping is a breeze both for you and your customers. Buyers can elect to have a paper receipt or an email one, and your point-of-sale system to which the NFC reader is attached has software that keeps track of all purchases. With fewer slips of paper flying around and your data stored in the cloud, you can rest a lot easier with the knowledge that tax time will not be so grueling (and you are also saving the environment by using less paper!)

The Cons

Sadly, we don’t live in a perfect world, so it stands to reason that NFC transactions using wired or wireless card readers have their stumbling blocks. Out of all of them, fraud is the most dangerous. As a merchant, you may be held responsible for refunding the customer if a purchase is fraudulently made using their digital wallet.

How can fraud take place? For one thing, not all payment systems require that a purchase, especially a smaller one, be authenticated with a signature, password or fingerprint. Few merchants take the time to check a customer’s ID or jot down the name as a precaution, which can sometimes allow an unauthorized person to make the purchase.

There’s also an app available for Android that criminals have been using to steal personal information. If a digital wallet isn’t properly protected, a criminal can steal their credit card information using this app merely by brushing up against their phone. With the credit card information they obtain, criminals can then use these details to make fraudulent purchases.

The Bottom Line

Purchases using NFC readers are not going to go away anytime soon; in fact, they are gaining in popularity. They can be a great way to streamline the payment process, which often leads to happy customers who are impressed by your tech savvy.

Before you take the plunge, however, be sure your equipment is upgraded, your staff is trained and you know how to protect yourself in the event that you suspect fraud. Running a tight ship by regularly checking in with your merchant services provider to ensure that you have the latest security upgrades can go a long way toward promoting safe NFC payments. And finally, always listen to that inner voice. If something about a purchase strikes you as odd, get additional information from the customer to verify their identity. You can never be too careful.