There are countless payment options out there — from credit cards to Bitcoin to mobile-specific apps. As your business continues to grow, seriously consider incorporating each one of these solutions (for the reasons listed here).
However, two of the most exciting payment technologies to emerge in recent years are near field communication (NFC) and magnetic secure transmission (MST).
These two technologies are quite similar. In both cases, users upload their credit card data into mobile and then use to make purchases in brick-and-mortar retail stores. These card details are encrypted within the phone and provide one-time authorization tokens for each individual purchase.
NFC and MST are also both contactless payment solutions that don't require the mobile device to physically interact with a merchant's terminal. All you need is physical proximity and the customer’s approval to authorize a transaction.
That's where the similarities end.
How are NFC and MST different — and what are the pros and cons of using either?
A Closer Look at NFC Technology
If your business currently accepts payments via Android Pay or Apple Pay, your store is already set up to process near field communication transactions. When a customer is ready to buy one of your products or services, they unlock their phone using a pattern, password, or fingerprint scan. Next, they wave their device across your terminal to initiate an electromagnetic induction link between the phone and the reader.
Voilà — you've just made a sale.
NFC technology had a rough start in the early days, with many promising solutions ultimately failing. Google Wallet, for example, didn’t win over enough converts — despite leveraging many of the latest security features available at that time.
The release of Apple Pay changed all that.
Despite making very few additional improvements, Apple managed to boost NFC's popularity by securing advanced agreements from hundreds of thousands of merchants. The company also released its newest iPhone with Apple Pay already enabled.
A Closer Look at MST Technology
Magnetic secure transmission technology uses "magnetic" signals to establish a connection between the user's mobile device and the terminal. This process essentially mimics the magnetic connection created when processing traditional credit cards.
The primary advantage of MST technology is that it works on most NFC-ready terminals. In fact, MST-enabled devices work with most types of readers that don’t require you to insert cards into the terminal.
On the surface, MST seems to be way more versatile. Merchants don't have to make as many upgrades and customers are able to use MST payment solutions at more locations.
Yet why hasn't it become the universal contactless payment standard?
There are a few reasons:
- Only a select number of banks and card issuers currently support MST technology.
- As of right now, MST is exclusive to Samsung. The company released magnetic secure transmission as part of its Samsung Pay program. What’s more, MST has only shipped with a limited number of phone models, including Note 5 and the Galaxy S6 series.
- Samsung Pay is only supported by certain carriers — almost all of them stateside. This is changing as the company continues to roll out its new payment solution internationally. However, even some global partners are reluctant to sign up.
Should You Delay Switching to MST?
The above limitations are very real — but they are mostly user-side problems. As a merchant, you probably won’t have to make any major investments. Provided that you have a newer terminal capable of reading NFC-enabled smartphones and wearable technology, you may be able to accept MST transactions.
To learn more about NFC and MST contactless payment solutions, contact our team of payments experts.