From the rise of debit and credit card use in the 70s, to the EMV liability shift in 2015, the ways businesses accept payments has evolved over time. One of the biggest payment trends, contactless payment, has made paying for things easier than ever before—allowing consumers to complete a transaction without even having a card present.
Contactless payments have transformed the consumer experience—forcing business owners to quickly adapt their equipment to ensure they are meeting their customers’ expectations. From Apple Pay®, to tap and go credit cards, the payment options for customers are extensive—and they continue to grow. It’s estimated that by 2022, there will be 75 million contactless mobile payment users.
As a small business owner, you’ve likely heard of these payment methods—and might be thinking about upgrading your POS hardware to make sure you can accept one or more of them. But you might also be wondering what exactly contactless payments are. Are they secure? How is customers’ data kept safe? How do you know if it’s the right option for your business?
Read on to get the facts and stats about contactless payments. We’ve got the answers to the questions you need to know to keep your business forward-looking and secure.
What is contactless payment?
While contactless payment has been around since the 90s, its use has only become widespread in the last several years—as consumers have become more dependent on their smartphones to help manage their day to day lives.
Contactless payment is a secure option for consumers to purchase goods and services using a debit or credit card through near-field communication (NFC). NFC allows two devices—like a phone and a payment terminal to communicate through radio waves when they are close together. This allows customers to simply tap a payment device—whether that be with a mobile phone or the actual credit card—rather than swiping a credit card or pushing it into a card reader.
While tap and go is most popular with credit and debit cards, the technology isn’t limited to just cards. The radio frequency identification can be embedded in many different devices—mobile phones, watches, key fobs, and stickers. With Apple’s introduction of “hover,” the list of contactless forms is continuing to grow.
Contactless payment is a popular payment form, and it’s definitely here to stay. By 2021, NFC or other contactless payment technologies are projected to generate nearly $190 billion in sales in the US—up from $113 billion this year. Only four years ago, contactless payments generated just $9 billion in sales in the US. While contactless payment is finally picking up speed in the US, it has been slow compared to the rest of the world. While only 3.5 percent of US transactions are contactless, in Australia, Canada, South Korea, and the UK, contactless payment accounts for roughly 20 percent of all transactions.
But is it secure? What about EMV technology?
Because of the ease of use associated with contactless payments, most card providers put extra security measures in place for these transactions. Contactless transactions maintain the high EMV security standard, using tokenization and encryption to communicate the sensitive data with the payment terminal. Mobile payments generally require a fingerprint or passcode be entered into the device before a transaction can be made. Contactless and mobile payments decrease the risk of the 16-digit account number or pin being intercepted since it is not transmitted, making them one of the most secure payment options available. And with less secure information living in your business’s database, you’ll be at lower risk for a security breach too. Additionally, some merchants and retailers may set a low limit and require a signature for larger dollar amounts for their tap and go system in order to prevent fraud—although contactless fraud is rare.
How do I accept contactless payments at my business?
As the rate of consumers using contactless payments increases, it’s important to make sure your business is ready to accept payments of all kinds. Look for a point-of-sale system that accepts all payment types—EMV contact or contactless, NFC, magstripe, and cash payments. The more convenient your checkout experience is, the more likely your customers are to return. In a recent survey, 84 percent of customers said the checkout experience was very important to them when choosing where to shop and eat. An outdated POS system can be detrimental to the health of your business—especially if it’s not secure and puts your customer’s personal information at risk.
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