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What Are NFC Payments And How To Enable Them In Your Store

Maryna Cherednychenko - February 5, 2021 - 3 comments

Money isn’t just about Franklin or Grant. Many years ago, people paid with precious gems and metals. Afterward, the paper currency crowded out coins. And, nowadays, a plastic card has become a common way to make payments. However, technology development is still on the go. Today, a new candidate aims to replace plastic. It is a mobile phone.

For modern users, a smartphone is a universal tool that has long ceased to be just a means of communication. It provides constant access to information and helps users make purchases in online and offline shops.

If you own a brick-and-mortar store and still don’t accept mobile payments, this post might come in handy. Here we will talk about the NFC technology, which allows accepting payments from a mobile phone, and explain how to set it up in your store.

NFC Meaning And Usage

NFC is short for near field communication. It allows data sharing between devices placed over brief distances, for instance, between a reading terminal and a mobile phone or tablet. The distance between devices should be no more than two inches – this is its main difference from the usual Bluetooth and Wi-Fi. Such a limitation is related to security.  To reach the data, you have to get very close to the smartphone, which minimizes the chance of data theft as opposed to the situation when devices are placed at a greater distance.

NFC steps into all spheres of our everyday life. Here are some areas where it is actively used:

– Offline purchases (paying by a card or mobile wallet app for goods and services)

– Data transfer (sending the text, image, video, audio files from device to device)

– E-key (using NFC-enabled key to unlock a door)

– ID card (holding a virtual NFC-enabled card with personal data)

– P2P transfer (placing the smartphone in front of another smartphone to make remittance)

– NFC-tags (discovering information embedded into the NFC-tag by placing the phone next to this tag)


NFC usage areas

NFC usage areas

How NFC Payment Works

NFC payment goes with no contact of devices. Also, the user does not need to carry the plastic around since the data is read from a virtual card copy stored in a mobile wallet. It is enough to keep the phone close to the banking equipment to accomplish a transaction. Note: both the payment and reader devices should have built-in NFC chips that share data in an encrypted format. The procedure takes no more than 1-2 seconds. Here is how the payment goes:

  1. The buyer holds the phone close to the merchant’s terminal
  2. The terminal scans the card data and sends it to the acquiring center.
  3. The acquiring center authorizes or cancels the operation.
  4. The user enters PIN or biometrics to confirm the transaction.
  5. The money is charged from the buyer’s account and debited to the seller’s account.

The touch-free connection works based on radio waves, which are alike with RFID labels used in warehouse apps. NFC chips operate at a specific radio frequency of 13.56MHz. It activates when the devices are close enough.

NFC Payment Security

NFC payment is considered highly secure. Of course, any protection can be hacked. However, NFC has several advantages that make it more reliable compared to other contactless technologies. Let’s review them in more detail.

Two-way data transfer. NFC devices can receive and transmit data simultaneously. It allows them to detect misfits if the received signal does not match the transmitted one.

Minimum action radius. There is a tiny chance of data interception, given the technology’s smallest range. If we compare NFC with Bluetooth, the latter is much more vulnerable. It operates within tens of meters, so it is easier for other devices to intervene.

End-to-end encryption. All transaction details go in an encrypted format. The token generated for contactless payment will not allow intruders to gain access to your card. And the fact of intercepting an encrypted identifier looks unrealistic.

One payment device at a time. During NFC payment, one payment reader can connect to only one payment device in one go. Such a feature excludes the possibility of the buyer paying for someone else’s purchase.

Multi-factor authentication. Contactless payment requires confirmation via fingerprint, password, or face scan. Without all this, the purchase will not be completed. It means that even if a smartphone is stolen, it is unlikely that someone will use it as a payment instrument.


What is NFC security consist of?

NFC security

Accepting NFC Payments In Your Store

To accept contactless payments using NFC, you need to install a POS terminal with an NFC chip in your store. Usually, POS terminals are obtained from the bank where you have a corporate account. You can also purchase an NFC reader from your payment service provider. Besides, you should check if your provider has eWallet in the list of acceptable payment methods. Most of them support digital wallet payments, but some – not.

The easiest way to launch NFC payments in your store is to partner with an all-in-one payment provider, like PayPal, Square, or Shopify. They are trusted financial corporations that specialize in web, mobile, and offline sales. For NFC payment, you will have to buy their NFC-enabled reader, and the provider will take care of the rest. Another perk of such a solution is that your mobile payment fees will not differ from the fees you pay for accepting credit or debit card payments.

Choosing Payment Provider

If you are on your way to choose a payment gateway provider, here is a list of top companies that serve both online and offline stores. They support different payment methods, including NFC payments through the NFC-powered reader.


When Square first appeared, it offered software for offline shops. Now it is a full-featured financial service that provides online and offline stores with both software and hardware. Merchants opt for Square to quickly enable payment solutions and guarantee their customers a pleasant shopping experience.

Square NFC reader allows processing payments by cards or mobile wallets. The reader also supports EMV chips and is supplied together with a free standalone magnetic stripe card reader. Merchants can accept payments by a counter or on the go so they can widen their sales geography as much as possible.


Square NFC reader

Square NFC reader

Price: $49 +$29 for a dock (optional)

Servicing fee: 2.6% + $0,10 per transaction

Forms of payments: mobile wallets, bank cards

Most suited for small and middle-sized merchants who sell via the Internet and in physical stores, as well as for service providers


PayPal is a large payment service provider that operates worldwide and serves big and small merchants in different countries. PayPal is worth considering, at least for its reputation and brand popularity. Seeing the PayPal logo, customers will treat you with greater trust, especially if they are not yet familiar with your company.

PayPal NFC reader offers a seamless shopping experience for your brick-and-mortar clients. It supports touch-free payments by the majority of cards, as well as by digital wallets. Just like its predecessor, it handles chip and non-chip cards.


PayPal NFC reader

PayPal NFC reader

Price: $79.99

Servicing fee: 2.7% for NFC and CC payments

Forms of payments: mobile wallets, bank cards

Most suited for PayPal users who want to expand their payment options to in-store contactless payments


Shopify is an international e-commerce platform that serves more than 1 million merchants in almost 200 countries worldwide. Shopify provides customers with a full package of tools to run their business. Among other things, it includes software and hardware for accepting online and offline payments.

Shopify NFC reader helps retailers grow their client base by enabling NFC payments in offline shops. It also works with EMV chips and magnetic stripe cards. Besides, you can deliver goods and accept payment at the client’s side, thanks to the ability to connect the reader to the device via Bluetooth.


Shopify NFC reader

Shopify NFC reader

Price: $49

Servicing fee: from 2.4% to 2.7% for NFC and CC payments

Forms of payments: mobile wallets, bank cards

Most suited for online retailers who want also sell offline

Grow Your Business With NFC

Non-contact payments are gaining popularity in offline stores. According to a Mastercard study, more than half of Americans use them regularly. During the Covid19 pandemic, this form of payment becomes hugely relevant because it excludes any contacts and reduces infection possibility. Given that a mobile wallet is the top-requested payment method, NFC technology has become an absolute necessity for a modern merchant.

If you intend to accept NFC payments, you need to purchase an NFC reader. Most payment providers offer such equipment at an affordable price. If you want to keep pace with the demands of the retail business, start moving towards NFC payments today.

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