Near Field Communication Technology for Credit Card Processing
The way consumers use their credit card accounts could be changing in the near future.  There have been rumors within the industry about the application of near field communication technology and it seems those rumors are close to becoming a reality. Credit card processing as we know it involves either the physical swiping of the actual card or entering card information manually to process the payment.  The future of credit card processing may be revolutionized with the introduction of near field communication (NFC) technology, allowing consumers to make credit card purchases without ever reaching for their wallet.

How Does It Work?
NFC technology allows data to pass between two devices using radio frequency identification (RFID).  For the purpose of credit card processing, this technology facilitates payment processing between NFC enabled smartphones and payment processors. In short, consumers would no longer be required to carry a physical credit card, instead using their mobile device to pay for purchases. The NFC enabled processors and mobile phones would send and receive data to complete the transaction and process the payment.

When Will The Change Take Place?
In the credit card processing industry, NFC technology has been discussed for years.  It was not until recently that consumers began hearing more about this new method of processing credit card transactions.  This would indicate that changes within the industry are coming soon. Mobile ecosystem experts at Juniper Research provided a list of top ten wireless predictions for 2011. They predicted mobile devices will begin to replace credit cards in 2011; noting that this is just the beginning of a transition which will not occur all at once.

According to their prediction, Nokia’s C7 handset and the new release of Android 2.3 will lead the way in NFC enabled mobile devices.  Possibly joining these devices is the next Apple iPhone which is rumored to include NFC technology.  It is important to note that the smartphone is only part of the equation. The availability of NFC enabled mobile devices is of no use to consumers until NFC payment processors are available as well. It is believed NFC technology will not be widely used until closer to 2014.

Will New Technology Cause New Problems?
As the credit card processing industry evolves, many question if the ability to make payments with your mobile device is really necessary?  More importantly, will this technology improve our lives or introduce new problems?  Whenever new technology or processes are introduced, the potential for new issues will exist.  The introduction and widespread use of NFC technology will likely provide both benefits and drawbacks for consumers. Today’s mobile devices have already changed the way people manage their time and money.  Smartphone users routinely check email, surf the Web and pay bills from their device.  The ability to use their phone to pay for products or services would seem like a natural progression.

Convenience will be one of the main benefits of NFC technology, with security being one of the main concerns.  When you consider how much sensitive information we now store on our mobile devices, the need for secure processes becomes a top priority.  Consumers will have to become educated in how their information is stored and what steps need to be taken to ensure private information remains private.  With the introduction of touchless payments, security will become more important than ever before.

A guest post by Frank Collins. Frank is a writer with experience in e-commerce, retail, online businesses and other related fields. You can read more about accepting credit card payments at the credit card processing blog.

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  1. I have to agree with elephant, hacker will be our biggest problems. With new technology, comes new risk.

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