All About Contactless Payments
“Contactless payments” — the hot topic for every consumer and retailer, has changed the way we used to pay for our food and groceries before the pandemic outbreak. A spokesperson for the World Health Organization recommended earlier this spring that one should adopt contactless payment modes whenever possible to avoid the transmission of COVID-19.
Since then, retailers have started accepting digital payments to avoid the spread of the deadline coronavirus! Before the pandemic, cashless payments were not very common in the US, compared to other countries like Canada and Europe.
Many credit card issuers are coming up with more flexible online payment options to make transactions more convenient both for retailers and consumers. Besides being hassle-free and fast, contactless payments are also much more secure and sanitary, considering the need to prevent the spread of COVID-19.
Types of Contactless payments
Contactless payments can be found in two main forms via a credit card -
Mobile Wallets or Payment Apps
With the popularity of apps and eWallets like Google Pay, Apple Pay, PayPal, etc., customers can now pay for their groceries and food purchases through their mobile devices. However, to be able to do this faster, you need to store your credit or debit card details in the payment app you would be using to make the transaction.
However, there’s nothing to worry, since these apps are trustworthy and secure to store your confidential data. Besides, today’s mobile payment apps come with authentication options, including fingerprint verification or FaceID, ensuring a safe payment environment.
Contactless Technologies Directly Embedded into the Card
The new-age contactless smart card is a credit-card size card used for making payments via its integrated circuits, which can store or even sometimes process transaction data. This embedded technology or chip usually communicates with a payment terminal via NFC (near-field communication). However, to read these modern card data, a store would need to adopt new card readers or POS systems.
The benefits of using a contactless smart card are manifold, including authentication, identification, and data storage. Further, these cards are designed to make business transactions more secure, flexible, and convenient, requiring little to no human intervention. Most importantly, these contactless cards can help prevent the spread of COVID-19 or any other viruses, for that matter!
How Secure Are Contactless Payments?
Besides preventing the contraction of coronavirus, contactless payments are quite secure and safe. This is because a unique one-time token is generated and sent over to the payment terminal for each and every transaction request made.
Additionally, both the contactless cards and payment terminals are embedded and integrated with several layers of anti-fraud technology and vital data. This information gets transferred between various terminals, while the added layers ensure the highest forms of security, thus making it difficult for hackers to intercept or steal your card data.
Moreover, this unique token number won’t contain any of the buyer’s card details. Suppose if a particular purchase is compromised, the token number generated for that specific transaction cannot be used again to make another transaction. The method provides an added layer of security, and this is where the safety of contactless payments lies.
The same process is applicable when we brush our card’s chip against a card reader; it’s just that contactless payments are much faster. And today’s mobile wallets have an added authentication step to verify the payee using a password, PIN, fingerprint, or FaceID before a transaction is made.
Many consumers, however, are concerned about whether hackers could steal their sensitive data electronically using NFC card readers, such as by coming physically close to one’s wallet. However, any such person with malicious intentions should really come close to you within 4–10 centimeters. Further, with the process of tokenization, they won’t be able to steal your card data.
Benefits of Using Contactless Payments
With the following top benefits of contactless payments, you can surely grow your business.
- Secure payments with fewer cybersecurity attacks or fraud losses.
- Offer a more streamlined payment process.
- Increased efficiency in payment processing and operations.
- Increased customer satisfaction and payment flexibility.
- Less physical contact means prevention of virus-carrying respiratory droplets.
- Easier, quicker, and safer transactions using the tap-and-pay technology.
- Shorter queues experienced at checkout, thus saving time spent at the grocery store.
Things to Consider Before Adopting Contactless Payment Modes
Talking about the benefits of contactless payments, let’s discuss the important factors you must consider before adopting them for your business.
Not all customers have proper access to contactless payments, mostly because they don’t always have access to smart technological devices. Moreover, there are other people who rely on other payments than cash. While there is yet another group of people who don’t have bank accounts to make digital or contactless payments.
It would cause problems for those people if retailers go for mobile-only payments. This is why many retailers have even noticed a backlash for not offering cash payments. Because the above people without access to mobile technologies won’t be able to make payments for their essentials.
Therefore, it is better to keep both the options so that everybody can make transactions conveniently. Also, try to maintain all the necessary precautionary measures to prevent the virus’s spread.
- Antiquated Systems Not Accepting Contactless Payments
To make contactless payments a success, bank branches and retailers need to install updated POS payment terminals at the ATM or checkout process. If they don’t have such systems, then you would need to stick to old-school methods like the traditional card swipe or an EMV chip dip.
- Transaction Limitations
One thing to keep in mind while using tap-and-pay methods is that you won’t usually require a signature of a PIN. And for this reason, the maximum withdrawals or purchases are often limited. The amount the cardholder can withdraw or spend varies depending on the policies of the sponsoring bank and, of course, the card issuer.
However, countries across the world are re-evaluating and assessing these translation limits since the need for contactless payments has grown after the pandemic outbreak. In response to that, the online news portal, NFCW, has reported on May 28 that 49 countries declared an increase in the contactless payment limit, ranging between 25% and 400% — the average being 131%.