What Is An NFC-Enabled Terminal?

To understand what an NFC-enabled terminal is, you first have to know what NFC technology is. NFC,which stands for Near Field Communications, is a secure,short-range wireless communication technology that lets two devices,that are both NFC enabled, exchange information. Think of NFC as a kind of radio frequency with 2 basic differences: it only operates at a very short range, usually 1 – 4 inches, but no more than 4 inches; and to use NFC to transmit information, it takes 2 devices that are both NFC compatible. For business operators, that means when your customer presents an NFC-enabled device (i.e.: a credit card, smartphone, key fob, etc.) to make a payment, you will need an NFC-enabled terminal to accept that payment.

We could dazzle you with the MHz numbers and the bits per second at which the data can be transmitted, but the truth is, all you need to know is that this technology is going to change how your customers pay for their purchases, and as a merchant you’ll need to be prepared.

What Are The Business Applications of NFC?

NFC technology is already being used for many applications. With an NFC-enabled smartphone you can read those little square code tags (technically referred to as QR or Quick Response codes) that appear everywhere,to get coupons, information about products, and more. In these instances, NFC technology is being used as a way to transfer data in one direction: from the QR code to your smartphone.

And you’re probably familiar with other applications of one-way NFC used for information transmission or identification. For example, with the right app you can download your airplane boarding pass and present your phone to the agent at the gate to scan. And your favorite stores offer electronic coupons that are sent to your phone and can be scanned at checkout.

But the newest use for this technology is the two-way transmission of information that can be used to make paying for a purchase quick and secure. And an NFC-enabled terminal is an integral part of that payment process.

What Are The Benefits of An NFC-Enabled Terminal?

Some credit card brands already offer cards with an NFC chip. With an NFC-enabled credit card, the cardholder simply waves the card in front of an NFC-enabled payment device. This technology is being referred to as contactless payment. No more need to swipe a card through a payment terminal that electronically reads the information from the magnetic stripe on the back of the card. The obvious benefit of this technology for both you and your customer is a secure, speedy checkout.

Merchants are hoping that in the not too distant future all their customers will be using NFC-enabled smartphones as a virtual wallet. No more need to carry credit cards, gift cards, rewards/point cards, cash or a check. This opens up endless possibilities for business operators.As with the NFC-enabled credit card, your customers will be able to pay for their purchase with a wave of their smartphone in front of an NFC-enabled terminal. The payment and settlement processes are the same as if the customer used a regular credit or debit card. But with this simplified process, payment transactions are faster and more secure, and your customers will have a shorter wait to pay for their purchases or services. That’s a win-win situation for everyone.

What’s the Downside to Accepting NFC Payments?

No matter how great the benefits of a new technology may be, the immediate downside to the business owner is usually the cost to upgrade equipment. In order to accept NFC payments, you must have terminals that can process this type of transaction. To do that you’ll have to purchase equipment that connects to your existing system to make it NFC compatible, or you can do a total upgrade of your present check out system. Either way, it can be costly.

But the big issue for now is whether or not the need outweighs the cost. Up until a few years ago, NFC technology was only being offered by a few credit card issuers and mobile phone manufacturers. But as moreof these companies are adopting this technology, business owners will have to be prepared to accept NFC transactions or lose their customers to business operators who have made the decision to go to contactless.