How to Accept Contactless Payments on Your Phone

The ability to accept contactless card payments on your phone is a relatively new innovation that has been made possible thanks to the provision of near-field communication capabilities on newer mobile devices. For merchants, accepting mobile payments is a quick and easy process that provides customers with another potential payment method.

Though the concept of making contactless payments with or on a phone has been trialled for some time, consumers and businesses are only recently popularising the idea. Businesses in certain locations (especially rural locations) may find that the number of consumers wishing to use this service is still fairly low. However, the widespread use of smartphones will inevitably make this payment method more popular in the future.

How to Accept Credit Card Payments on Your Phone

Mobile credit card payments, AKA “tap on phone” or “tap to pay” allows businesses to accept payments from customers with a contactless card or mobile wallet (such as Apple Pay or Google Pay) from their own mobile phones.

Though no extra point-of-sale (POS) hardware is typically required, both the customer’s and business’s mobile devices must be NFC-enabled (near-field communication enabled) to take advantage of this system.

How Do NFC Payments Work on Mobile?

To complete an NFC payment using mobile phones:

  1. The customer holds an NFC-enabled device or contactless card close to a card reader or payment terminal with NFC capabilities (the latest mobile devices come with NFC capabilities that you can activate in the Settings app).
  2. The customer’s device then sends the customer’s payment details to the receiving device (or the receiving device “reads” the customer’s card) by radio frequency to complete the transaction quickly and securely. If the customer is using a digital wallet to make an NFC payment, they must unlock their payment app and choose their preferred payment method before holding their mobile device close to the NFC reader.

Total time: As long as both you and the customer have internet access, the entire process only takes a few seconds to complete.

Is Making and Accepting Payments on Your Mobile Phone Secure?

Accepting card payments through a mobile credit card reader or NFC reader provides a secure experience for the customer and the business. When a business receives a payment through an NFC device, the terminal encrypts the information and sends it through a secure global payment gateway for authorisation from the card and banking networks.

Accepting payments in this way is more secure than swiping the magnetic stripe on a credit card because NFC-enabled devices and payment readers use one-time codes instead of the customer’s card number to exchange data. Because magnetic stripes contain the customer’s card number, they’re more open to data breaches and card fraud.

Can I Use the NFC Technology I Already Have to Accept Contactless Payments On My Mobile?

Most businesses these days use an NFC-enabled POS terminal to accept in-person payments. For businesses with this type of credit card payment processing technology, it may be simple to start accepting mobile payments, but this will depend on the tools you have been given access to by your merchant services provider.

Whereas a card reader attachment is generally required to accept card payments on your phone, the main requirement for contactless mobile payments is an NFC reader or a smart device with NFC capabilities.

What NFC Technology Does a New Business Need?

If you are setting up a new business, you must open a merchant account before you can accept any type of contactless payment—including QR code payments, mobile payments and credit or debit card payments. You will then need to work out what hardware you need to offer your chosen payment methods. This could include:

  • An NFC-enabled smart device to accept contactless payments (including QR code payments) on your phone
  • mPOS readers to accept credit and debit card payments on your phone

Is Accepting Card Payments On My Phone Worth It?

Each business is different, with different customer demographics and different needs. However, investing in mobile credit card payments may be a good idea for many businesses. These are the main arguments in favour of adopting this system:

  • Merchants can accept credit card payments anywhere as long as they have access to a smartphone and an internet connection. This is advantageous for businesses that don’t have a fixed location, such as tradesmen.
  • Because your mobile device can double up as a payment terminal, businesses don’t need to invest in expensive hardware.
  • More people in the future will expect to be able to use their mobile devices to purchase goods and services. Businesses need to be willing to evolve and meet the demands of the changing payments landscape.

According to World Bank statistics, 78% of adults owned mobile money accounts in 2022 in Europe and Central Asia, up 13% from 2017. This reflects the growing interest in mobile payments and is something businesses should take note of.

Offering as Many Payment Methods as Possible Makes Good Business Sense

As we head towards a more cashless society, innovative payment methods will inevitably come onto the market that customers will expect to see in shops and online. It is in businesses’ best interests to embrace these changes and offer potential clients as many different payment options as possible.

Many business owners may find that these innovations also bring change to their traditional way of working and accepting payments. Your merchant services provider can walk you through these changes, explain how they can benefit your business and provide you with the necessary guidance and technology to implement them successfully.