In-store shopping behaviors are constantly evolving. As merchants race to keep up with new payment trends and the emergence of omnichannel consumerism, the desire for fast-paced, secure transactions is dominating the next era of retail success.
As we step into a digitalized retail industry, technology continues to make this transition easier for brick-and-mortar businesses. From smart POS systems to contactless transactions, there are many inventions to choose from that all improve customer experience at the checkout.
One revolutionary integration is the introduction of near-field communication (NFC) payments, which aim to facilitate speedy yet secure mobile transactions.
With over 94% of smartphones NFC enabled in 2024, it’s crucial that retailers accept smartphone-centered payments.
With this in mind, let’s jump into the ins and outs of near-field communication payments and discuss the impact NFC payments could have on brick-and-mortar success.
What Is an NFC Payment?
A near-field communication payment, also known as NFC, involves sending encrypted payment information from a consumer to a retailer during the transaction.
When an NFC-enabled card or mobile wallet completes a transaction, encrypted data about the customer’s payment information is sent immediately to the retailer’s POS system for secure storage.
This data can then be leveraged to help build a consumer profile for each customer and be used to map historical purchases.
NFC payments are most often a contactless affair. As more customers switch to mobile wallets such as Apple Pay and Google Pay, NFC payments are an extremely convenient way to facilitate tap-and-go purchases.
Better still, the data stored can be used by a retailer in a store loyalty program, that turns purchases into points that can be redeemed for rewards and offers.
How Do NFC Payments Work?
NFC payments are facilitated using near-field communication technology. When an NFC-enabled device like a mobile wallet comes into contact with an NFC-powered point of sale, it transmits payment information via a simple tap.
This immediately processes a payment that is two-way encrypted, which is twice as secure as inserting a card into a reader slot.
When facilitating a mobile NFC payment, transaction security levels up. The customer must authorize their mobile wallet using a face ID or a passcode.
Once completed, the transaction information is immediately relayed to the near-field communication terminal in the from of an AI-generated one-time passcode. This is sent directly to the merchant and cannot be used again, making it useless for potential cyber-hackers.
How Do NFC Payments Improve Retail Transactions?
There are plenty of ebenfits associated with introducing an NFC-enabled POS system to your brick-and-mortar checkout.
Not only does adopting the technology put your retail store ahead of the curve, but you can offer your customers speedy, secure and convenient transactions in the era of tap-and-go shopping.
Here are just a few ways NFC payments can transform every stage of the retail checkout experience.
Encrypted Two-Way Communication
Unlike other contactless technologies, NFC terminals facilitate an encrypted two-way form of communication between merchant and customer.
When a payment is processed, the NFC POS system receives an encrypted message with the customer’s payment information, and the customer receives an update to their personal purchase profile in the form of loyalty points.
This capability encourages customers to keep coming back to the store to build up points and claim in-store rewards.
Multiple Layers Of Security
In an age where cyber-hacking is at large, secure transactions are a paramount concern for all retailers.
NFC payment systems address this by leveraging advanced encryption technology and unique tokenization.
Instead of processing a transaction with sensitive patent data, NFC systems turn this data into tokens that cannot be tracked or hacked by cybercriminals.
Alongside this, advanced NFC terminals also require biometric authorization in the form of a fingerprint or face identification. This adds yet another layer of security to in-store payments and encourages customers to keep making transactions in-store.
Bolstering Speed and Efficiency
In-store shoppers demand a seamless experience when they visit brick-and-mortar retailers on the high street.
In order to keep up with fast-paced ecommerce practices, retailers must do whatever they can to ensure that the checkout process is speedy and efficient in 2024.
NFC payments are instant, a tap-and-go affair. This reduces queues, eliminates human errors, and leads to a higher satisfaction rate amongst in-store consumers.
More Insights For Future Retail Marketing
Last but not least, NFC technology can also be leveraged to enhance your next brand marketing campaign.
With the ability to store data based on customers’ historical transactions, you can gather all payment data together to gain insights into what is working and, more importantly, what needs to change in-store.
From the most popular product to the time of day your store sees its traffic peak, you can utilize this real-time data to create promotional campaigns surrounding your bestselling stock and adapt your merchandising to showcase some of the less-loved products on the shop floor.
What’s Next For NFC In Retail?
According to Insider Intelligence, contactless spending is expected to double by 2026. As more customers opt for tap-and-go payments, NFC points of sale are crucial if you want to ensure that in-store transactions remain secure.
From two-way encrypted communication to tokenization of payment data, NFC terminals are paving the way forward for a safer shopping experience in 2024.
Also Read: The Mobile Payment Revolution: How Companies Implement Smartphone Billing
