Consumers and experts both agree that mobile payments are on the rise. In the UK alone, it is estimated that in the past year Near Field Communication (NFC) payments have accounted for nearly £25 billion of overall spending. The market is relying more and more on technology, and consumers are becoming accustomed to today's fast-paced world. People are increasingly embracing anything that can make their lives easier, even if it saves only a few seconds of time.
Making payments and purchasing items with smartphones has become almost second nature. From online shopping to paying bills to using dedicated apps, many people are completing financial tasks using smartphones. One payment technology available for smartphones is NFC technology, and more phones are now coming with this as a standard feature. Using an NFC-enabled phone allows consumers to quickly make purchases on the go while maintaining a high level of security.
Not only are traditional debit and credit cards compatible with NFC technology, but many prepaid cards are also compatible. Prepaid cards were once shut out of the NFC technology that drives mobile wallets. However, in recent years they have come to be included just like any other card. This is great news for prepaid card holders and card issuers as well as merchants who are able to accommodate more customers.
Here, we'll take a look at how prepaid cards work with mobile wallets and the benefits to both consumers and retailers.
How Does NFC Technology Work?
Although the technology is becoming more common, many are unfamiliar with exactly how NFC technology functions. To put it simply, a customer makes a purchase by holding their NFC-enabled smartphone near a point-of-sale receiver. The receiver then picks up stored, encrypted payment data, which is transmitted for approval.
Businesses that already have NFC technology enabled at their payment terminals can be assured that any NFC-enabled mobile device or card can be accepted at their place of business. Some cards even feature NFC technology built right in, which is slightly different than the recent prevalence of embedded chip card technology.
Some of the most popular mobile wallets include Apple Pay and Google Wallet. In general, Google Wallet can be used for most smartphones running an Android operating system. It is compatible with several mobile carriers, but not every mobile phone is compatible.
The same is true for Apple Pay, with only later generation phones being equipped with NFC technology. With such a wide availability on millions of smartphones, Apple Pay has experienced a surge in transaction volume in the past year alone. According to Apple CEO Tim Cook, Apple Pay transactions have skyrocketed by almost 300 percent in the UK. He also noted that Japanese Apple Pay transaction volume recently reached about 20 million transactions per month.
Fast and Easy Transactions
Perhaps the biggest draw to NFC technology is convenience, something that prepaid card issuers have based their entire business model on. Now that more prepaid cards are compatible with this technology, checking out is faster than ever. Customers can hold their devices or cards near payment terminals instead of digging around in a handbag or wallet for cash. Card approval is also much faster when using NFC compared to swiping or inserting a chip card.
In the case of prepaid debit cards, NFC technology can save even more time. Using one of a variety of apps available, prepaid card users can reload their cards practically anywhere and even transfer money to another prepaid card in real time.
The overall benefit to using NFC to make payments is the doing so saves time. Though the seconds or minutes may not seem like much, these transactions add up. Other benefits include reduced exposure to germs from handling cash or cards as well as enhanced security. When using this technology, the customer’s card never leaves their possession, so the chances of theft are significantly reduced.
Experts assert that using NFC technology is highly secure, with fraud protection remaining the same as when using a physical card. The card information stored in a mobile wallet is encrypted during transmission at the point-of-sale (POS). Thus, scam artists are less likely to be able to access sensitive card data, even if they are standing nearby.
There is bound to be skepticism about any new technology, but as evidenced by research, use of NFC technology seems to be gaining traction. With the ability of prepaid cards to be used as well, use of this technology is expected to skyrocket in the coming years.
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