Contactless payments are quickly gaining popularity with merchants and consumers alike. A 2020 Mastercard survey showed that 79% of its customers globally used contactless payment. How can your company take advantage of this growing trend? Read on to learn the benefits these payment systems offer for small businesses and how you can implement one.
What is Contactless Payment?
Contactless payment is any system that allows consumers to make a purchase without touching the payment terminal or handing over cash. Most contactless transactions use a technology called near field communication (NFC). Sometimes called tap-and-pay, these point-of-sale (POS) systems don’t require an actual tap. The consumer simply needs to place their credit card or mobile phone within an inch or so of the contactless payment terminal to make their purchase.
NFC uses radio waves to allow the credit card and contactless POS terminal to communicate. It’s a standard wireless communication protocol that enables encrypted information to flow between the two devices.
Types of Contactless Payment
The contactless payments used in retail stores, restaurants or other small-business settings generally fall within a few types.
Contactless Credit Card
Contactless credit cards contain embedded chips that use NFC to communicate with the POS terminal. Working passively, they use the terminal’s power to transfer the encrypted payment information.
Pay With Phone
Mobile phones have become a popular choice for contactless payments. Pay-with-phone options include:
- Apple Pay: stores the user’s credit card information on an Apple device (like an iPhone)
- Google Pay: uses encrypted technology to connect to the user’s credit card information
- Samsung Pay: operates similarly and offers cashback rewards.
Some banks are also beginning to provide payment apps that work on mobile phones.
What are the Benefits of Contactless Payment Systems for Small Business?
Health and Safety
COVID-19 introduced a new emphasis on health and safety for consumers and merchants. Credit card companies like Visa and Mastercard reported a massive increase in contactless payments once the pandemic began. Contactless transactions address the health and safety fears of consumers who no longer want to handle cash or touch a POS terminal. A contactless credit card terminal also requires less sanitizing, which benefits merchants.
Transaction Speed
Contactless payments using NFC take just a few seconds. The processing time is much less than cash transactions or payments made with magnetic stripe credit cards. Streamlining transaction processing makes customers happy and lets companies ring up more sales quickly and efficiently.
Payment Flexibility
Many consumers prefer contactless payment because it gives them control over their payment method. A contactless credit card terminal that accepts NFC-enabled credit cards and alternatives like Apple Pay or Google Pay gives consumers the options they want, increasing customer loyalty.
Fee Incentives
Many banks have begun offering cashback and other fee incentives to consumers who switch to contactless payments. Because there’s no difference in processing fees for contactless transactions compared to those using traditional credit cards, there’s no financial barrier for merchants that offer the option
Accuracy
Accuracy is baked into NFC-enabled purchases, which are governed by a comprehensive set of checks and balances. Each contactless payment generates a detailed digital record to facilitate reconciling, auditing and reporting.
Security
Often seen as one of the barriers to contactless payment, security is actually one of its most significant benefits. Contact-free transactions must occur over a minimal distance, automatically reducing the likelihood of transmission interception. They also don’t require a PIN, which is often easy to steal or figure out. NFC-enabled payments undergo a very high level of encryption, in compliance with PCI Security Council standards. Because it transmits unique, dynamic data, a contactless credit card is more challenging to decipher than a credit card with a traditional magnetic stripe, which stores static information.
How to Transition to Contactless Payments
Implementing contactless payment systems for small businesses is as easy as acquiring a contactless credit card terminal. MONEXgroup has you covered with a wide range of options, including payments on the go, payments in store and unattended payment solutions.
Switch to Contactless Payments With MONEXgroup
MONEXgroup has nearly 20 years of experience in implementing payment systems for small businesses and large ones. You can rely on us to provide a contactless payment system that meets your unique needs. Contact our experts today to get the process started.
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Author: Layal Scheirich, Head of Sales at MONEXgroup
Bio: With 18 years of experience in payment processing and merchant services, Layal has seen in-store POS technology evolve from its humble beginnings to contactless, unattended, mobile and online alternatives. Today, Layal is an inspiration to the MONEXgroup’s team and a go-to source of information related to payment processing. She is enthusiastic to share her knowledge with audiences interested in cutting-edge technologies available today, such as unattended payment for self-serve kiosks, e-commerce online payment gateways, virtual terminals, and contactless and mobile payment solutions.
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Contact Info: insights@monexgroup.com
