What LevelUp’s NFC Terminal means for your Small Business

The new mobile payment market got a little bigger as LevelUp recently announced they will introduce a new NFC terminal. NFC stands for Near Field Communication and it’s a chip that can exchange information with another NFC chip when in close proximity. The chip has only been in smartphones since 2010 but it’s already getting a lot of attention in the mobile payment industry.

Paying with your phone has been regarded as the wave of the future by a lot of big names in the industry. The problem is, most smartphones right now do not have NFC, which part of the reason why LevelUp has been successful. LevelUp has instead chosen QR codes, which makes any smartphone with a screen a wallet. All a consumer has to do is open the LevelUp app, display the QR code at the terminal, which is usually another smartphone, and the payment is processed.

Why NFC now? It would seem like LevelUp is betting NFC will become a lot more popular in upcoming smartphones. When that’ll happen is a different story, even the new iPhone 5 is rumored not to support NFC. But their bet isn’t without warrant, paying with NFC is a much better experience than paying with QR codes. NFC doesn’t require opening up an application, displaying something on your screen, then lining it up with a reader; all NFC requires is a simple tap of your cell phone. Ease of use could be the underlying factor in this decision, but Seth Priebatsch, LevelUp’s founder says it’s about options: “We need to be everywhere and in every way that the consumer chooses. We don’t really care how you pay with LevelUp, we just care that you do pay with LevelUp,”

While more options might be a good thing for consumers, it might not be the best thing for merchants. Mobile payment solutions is gaining momentum and is not going away, but it’s also not going to completely replace the use of credit cards. If a merchant wants to start allowing their customers to use their cell phones, they’re already faced with several decisions. They would have to decide if they want to use the QR system, or if NFC would be a better choice. If they choose NFC, they then have to decide to use Google Wallet’s platform, or maybe LevelUp’s. Or both. All of this means more costs to the merchant, as well as time in setting up the equipment and training employees how to use it. It also means merchants will have to continue to accept regular credit cards, which comes with a separate structure of rates and fees. Is it worth it? Only time will tell.



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