Contactless payments enable quick, convenient, and touch-free ways to pay for purchases.
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Contactless payments made up almost one-third of all UK payments in 2021.1 The total value of contactless payments grew 50% in 2022, which can be attributed to more merchants accepting contactless payment methods and more customers using mobile wallets at checkout.2
NFC is the technology that makes many of these contactless payments possible. This article explores the ins and outs of NFC and contactless payments, including what they are, what they can be used for, and how to potentially set them up.
NFC mobile payments refer to contactless payments made from a mobile device or NFC-enabled payment card. NFC stands for Near-Field Communication and is a subset of Radio Frequency Identification (RFID). NFC is the process that can allow two devices — like a mobile phone and a payments reader — to share data in proximity.
So, what is NFC used for? This technology has many potential applications, including enabling mobile payments for shoppers. Instead of handing over cash or even swiping a card, NFC allows individuals to simply tap their card or mobile device to a merchant's payment terminal.
An NFC mobile payment is a type of contactless payment. Contactless payments are generally considered to be touch-free payments that can be made by transferring data between two nearby devices. Many, but not all, contactless payment methods use NFC technology. Some contactless payments that don't use NFC are QR code payments.
NFC payments may work by transmitting data between two objects within a few inches apart, like a customer's smartwatch and a merchant's payments reader. Contactless payment cards typically have NFC chips that allow for this transfer of data. NFC capabilities can also be built into many smart devices — so if a customer has a digital wallet set up on their smartphone, they may be able to use it to make an NFC payment.
NFC payment data is usually encrypted with alphanumeric codes, making this one of the more secure payment methods.
There is a spending limit for contactless card purchases in the UK. In October 2021, the HM Treasury and the Financial Conduct Authority increased the contactless payment limit from £45 to £100 per card purchase.3
It should be noted that this limit only applies to contactless credit card purchases — not to contactless payments by mobile device and mobile wallet.
There are generally two main ways to pay via NFC connection:
There are potential advantages and disadvantages to using NFC payments. Here’s what to know:
Some of the benefits of NFC payments may include:
The potential downsides of NFC payments may include:
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