Payments. Ecommerce. Profits.

What Is An NFC Transaction

What Is An NFC Transaction?

NFC stands for Near Field Communication, and it’s a way of transferring data between two devices using radio waves.

It was originally designed for mobile payments, but now it has become a standard feature on smartphones.

Near Field Communications (NFC) is a short-range wireless communication protocol developed by NXP Semiconductors. 

The technology allows electronic devices to communicate within close proximity of each other.

In simple terms, it enables consumers to pay for goods or services at checkout counters by simply tapping their phones against payment terminals.

You might be wondering why you should care about NFC transactions. Well, they are becoming increasingly common.

For example, Apple Pay, Google Wallet, Samsung Pay, and Android Pay are some of the leading mobile payment apps. 

They allow you to send and receive money from friends and family without having to carry cash or credit cards. This article will discuss what exactly NFC transactions are and how they work.

What Is An NFC Transaction?

An NFC transaction works in much the same way as a contactless card transaction. You tap your phone against the reader, which then sends a request to the merchant’s terminal.

If there is enough balance left on your account, the transaction goes through. 

Otherwise, the system asks if you want to add funds to your account. Once that happens, the amount is deducted from your available balance.

The biggest difference with NFC transactions is that they don’t require any form of identification. Unlike traditional credit cards, you don’t need to enter your PIN when making a purchase.

Instead, you just have to tap your phone against the payment terminal.

How Does NFC Work?

When you make a payment with an NFC transaction, the device broadcasts a signal over the airwaves. A nearby NFC reader picks up this signal and uses it to identify the device.

The reader then communicates with the payment processor, which authorizes the transaction.

To ensure security, the NFC transaction only takes place when both parties agree. When the payment is complete, the reader notifies the user via vibrations or light flashes.

Why Should Customers Use NFC Transactions?

There Are Many Reasons Why Customers Would Prefer To Use NFC Transactions Instead Of Traditional Methods. Here Are Some Benefits

  • No more carrying around plastic cards. With NFC transactions, you can store all of your information on your smartphone.
  • You won’t need to worry about losing your wallet. Your phone contains everything you need to make purchases.
  • There are no fees involved with NFC transactions.
  • You can make payments anywhere you go. Whether you’re shopping at a grocery store or visiting a restaurant, you can still use your phone to make payments.
  • You can also use NFC transactions to make donations. Just scan a QR code to donate to a charity.
  • You don’t need to remember your PIN. All you need to do is tap your phone against the terminal.

Why Should A Business Use NFC Transactions?

If you own a business, you may be interested in using NFC transactions. Here are some advantages of doing so:

It Saves Time

Traditional forms of payment take longer than NFC transactions because you need to fill out paperwork first.

It Reduces Fraud

Since NFC transactions don’t require any personal information, you eliminate the risk of identity theft.

It Improves Customer Service

By eliminating paper receipts, you can provide better customer service, as it speeds up transactions and allows customers to track their purchases with ease. It also helps save paper too, and who doesn’t want that?

How To Set Up NFC Transactions For Your Business

Setting up NFC transactions for your business isn’t difficult. In fact, it couldn’t be easier. First, you’ll need to get an NFC-enabled payment terminal. These terminals are usually located near the register where customers pay their bills.

Next, you’ll need to install an app on your mobile devices. This app will allow your customers to make payments without having to enter their PINs.

Once you’ve set up the app, you’ll need to connect it to your bank accounts. If you already have an account with a major financial institution like Chase Bank, Wells Fargo, or Citibank, you should be able to link your account right away. 

Otherwise, you’ll need to contact your bank to authorize the connection.

Once you’ve linked your account, you’ll need to create a new card. This card will represent your business’s NFC transactions. You’ll need to give your customers a unique ID number to use when making payments.

You’ll also need to add your business name as the issuer. This way, your customers know that they’re paying for your company.

You’ll also need to assign a merchant ID to each terminal. This ID will help the terminal recognize your business.

Finally, you’ll need to tell your customers which apps to download and how to use them. Once your customers download the appropriate app, they’ll be ready to start making payments!

What Are The Different Types Of NFC Transactions?

NFC transactions come in two different types: peer-to-peer and server-based. Peer-to-peer transactions occur between two individuals who want to make a payment. Server-based transactions involve a third party (like a retailer) acting as a middleman.

Peer-To-Peer Transactions

In peer-to-peer transactions, there are no intermediaries involved. Instead, both parties exchange data directly through NFC technology.

Server-Based Transactions

In server-based transactions, a third party acts as a middleman. When this happens, the third party receives a request from one person and then sends the request to another individual.

Which Type Is Better For My Business?

There are pros and cons to both types of transactions. However, if you want to offer your customers more convenience, you should consider implementing server-based transactions. Here are some reasons why:

1. They’re Faster

With peer-to-peer NFC transactions, people must wait while the other party initiates the transaction. On the other hand, server-based transactions happen almost instantly.

2. They’re Cheaper

Because there aren’t any intermediaries involved, server-based transactions cost less than peer-to-peer ones.

3. They’re Safer

Since there aren’t any intermediates involved, server-based NFC transactions are much safer than peer-to-peer transactions.

4. They’re Easier To Implement

It’s much simpler to set up a server-based system than a peer-to-peer one.

5. They’re Easier To Scale

As long as you have access to the Internet, you can easily expand your server-based system to accommodate additional users.


NFC transactions are a great way to improve customer engagement within your business.

While both peer-to-peer payments and server-based transactions work well, we recommend using server-based transactions because they provide better customer service. Plus, they’re much easier to scale, and will offer your customers a secure and efficient way to pay.

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