What are NFC payments, how do they works, and how to implement them in your business


Customers’ shopping behavior has transformed significantly in the last decade. Therefore, your business needs to keep up with your customer’s preferences, which include convenient, fast, and secure transaction options.

Fortunately, advancements in payment technology, including NFC payments, have paved the way for customers to have a seamless payment experience during checkout. 

In this article, you’ll go through the workings of NFC payments, including how they work, the benefits of using NFC payments, and how to implement them in your business.

Let’s start with what NFC payments are and how they work for you!

What are NFC payments?

NFC payments take place when an NFC-enabled debit or credit card or a mobile wallet communicates with a POS payment terminal and sends encrypted payment information to the merchant’s accounts from the customer’s bank account.

Moreover, with mobile wallet solutions being popular worldwide NFC mobile payments are a hit among customers. Customers who wish to have an extra layer of security and convenience can use their mobile wallets at retailers whose point-of-sale devices support tap-to-pay.

As the old cards are expiring, tap-to-pay cards are now issued to customers in great numbers.

How do NFC payments function?

  • NFC payments work on an NFC-enabled EMV chip that comprises a unique RFID radio frequency. 
  • When two chips are close together, contactless transactions can be made between the payment terminal and the device.
  • There’s the transfer of encrypted payment data between two NFC chips, allowing the completion of NFC payments.

This quick process thus results in making NFC mobile payments as most of the easy and secure payment techniques. 

Moreover, it’s the reason why NFC-enabled payments in different applications, like PayPal, Apple Pay, Samsung Pay, and more, are becoming a prevalent choice among customers for making transactions as their preferred payment option.

NFC mobile payments have two-way encryption, which makes them a more secure payment method, unlike inserting debit or credit cards or just swiping cards.

In this process, the card information and data are encrypted when it’s sent to the POS, and it further requires verification from a mobile device with options like face ID, passcode, or fingerprint.

Once the verification process is complete, the transaction information is transferred to the NFC terminal, and a one-time-use code is generated, which is again sent to the merchant rather than the customer’s debit card.

It’s quite challenging for hackers to use this encrypted card information which is transmitted to merchants and customers to complete a transaction.

The reason behind this is the one-time code, which cannot be reused as it sends encrypted payment information, making it worthless for hackers.

NFC technology involves three modes of operation:

Card emulation

NFC technology allows monetary transactions, including checks, electronic fund transfers, gift cards, money orders, and bartering, in the card emulation mode.


This mode allows users to interact with NFC tags, where two devices wirelessly communicate. The tag promotes data transfer between two close payment devices, such as tablets, mobile phones, and more.


Peer-to-peer mode allows two NFC devices to exchange data.

NFC payments don’t happen by chance as they are highly secured and much more beyond close proximity to the payment terminal and multi-factor authentication to complete the transaction.

Benefits of using NFC mobile payments

NFC mobile payments bring a series of benefits to your business and your customers. So here are a few of them mentioned below:

Frictionless transactions

Customers don’t need to insert their credit or debit card into the terminal, as a contactless card generates a one-time code for every transaction to access their payment information.

When the user taps to pay, this code is transmitted with their bank account number without transmitting their billing address, card verification code, and name.


When the one-time code is generated during NFC payments, it becomes impossible for a thief to decode the complex algorithm businesses use to generate this code.

Also, as payments are PCI compliant, there’s less risk involved if customers pay using their smartphones or wearable devices.

Also, swiping a magnetic stripe during payment processing can allow hackers to capture the personal information of customers. They can create a duplicate magnetic stripe to carry out illegal transactions with. Thus, NFC payments use a secure chip to complete the transactions.

Better for overseas travel

Digital wallet apps, such as Apple Pay, use NFC technology, and users can make online purchases anytime, anywhere.

How your business can implement NFC mobile payments in their system?

For implementing NFC mobile payments, businesses should have the right equipment. Moreover, NFC mobile payments along with other contactless POS payment terminals involve credit card machines that encompass chip readers, card swipers, embedded NFC technology, and monitors.

The initial step to incorporating contactless payment terminals in your system is to determine which works best for your business, why you need them, and how your customers will benefit from NFC mobile payments.

Several enhanced POS technologies are available in the market; customer profiles, business sizes, and other specific business requirements will determine which payment terminals and POS systems are appropriate. 

Let’s say, a luxurious restaurant or simply a restaurant will have different POS requirements when compared to a clothing shop. Thus, when discussing with your payment processing provider, it’s essential to discuss your requirements to achieve the best setup and equipment for your business.


Going contactless with NFC mobile payments is making users worldwide realize that NFC technology is one of the most convenient, quickest, and secure payment solutions.

Businesses need to adjust and focus on their operations to meet safety compliance regulation standards for their staff members and customers. 

Organizations should also continue transforming with technological advancements to stay updated and relevant. An out-of-date payment processing system is a security risk and an inconvenience to customers. 

Thus, offering contactless payment solutions is one measure that offers plenty of benefits to your organizations as you can focus on the hygienic benefits of not having a physical interaction with a POS terminal when promoting this solution in stores, alongside its significant security benefits.