Gone are the days when mobile phones were used only for phone calls and text tennis; these days, smartphones and digital wallets are transforming the way businesses get paid by their customers. Knowing how to accept mobile payments is increasingly vital, as it's expected there will be more than 70 million people making point-of-sale mobile payments by 2023, according to eMarketer. But what exactly are mobile payments? In this guide we'll explore the benefits of mobile wallet technology and explain how to accept NFC (Near Field Communication) payments.
Digital wallets explained
Here's something you might not know: digital wallets aren't exactly the same as mobile wallets. Digital wallets allow the customer to buy online products or services from a variety of devices, such as smartphones, tablets and computers, where their payment information is securely stored. More broadly, these devices can also help verify the customer's identity, such as their age when buying alcohol.
What is a mobile wallet then?
A mobile wallet operates in much the same way as a digital wallet, but the term refers to apps used solely on smartphones, rather than tablets or computers. To some extent the terms are used interchangeably, as digital wallets are powered by mobile wallet technology, or more specifically, NFC payment technology.
What are NFC payments?
NFC payments are the same as contactless payments, a term which is more familiar to most people in the UK. NFC stands for Near Field Communication, which is the technology upon which mobile wallets are based and was first introduced in debit and credit cards back in 2007.
How do NFC payments work?
Knowing how to accept NFC payments is crucial for many businesses, but it's very simple. When a customer holds their mobile device over a NFC-compatible card machine, the payment is processed. That's because NFC technology uses electromagnetic radio waves to transmit information between two electronic devices. NFC payments aren't simply taken on mobile phones; these days, your customers can pay using smartwatches, payment wristbands and other forms of wearable technology.
Are NFC payments safe?
Yes, NFC payments on digital or mobile wallets offer a high level of security. Firstly, there needs to be a distance of around 4cm between the digital wallet or mobile device and the card reader; this helps to keep customers' data secure. Also, NFC card machines can only connect to one device at a time, which means your customers won't accidentally pay for somebody else. And perhaps most importantly, mobile wallet technology uses encryption and two-step factor authentication to protect your customers' information. For higher value mobile payments, customers must confirm by using Touch ID (Apple's electronic fingerprint feature) or facial recognition-enabled digital wallets such as Google Pay and Samsung Pay could be considered.
Will mobile payments replace cards?
It was in 2017 that UK debit card payments finally overtook cash transactions for the first time, according to UK Finance. They've also found that by 2028, just 9% of all payments will be made by cash, compared to 37% by contactless NFC payments. And while it may be a long while before mobile wallets replace debit cards, by 2023, a quarter of all smartphone users in the UK are expected to make in-store payments using their mobile phone, reports Statista. Also, 16-24 year-olds are the most likely to register for mobile payments (around 28% of those registered) so for businesses to stay ahead of the curve, it's a great idea to get a card machine that allows you to take phone payments from any device.
Get set up for NFC payments
The way in which businesses get paid is changing fast, and it seems inevitable that digital wallets are here to stay. And when it comes to future-proofing the way your business takes payments, there's no time like the present.