Looking for an easy way to take payments in these uncertain times? Contactless payments may be the way to go. While they’re nothing new, they’ve recently picked up steam due to COVID-19, with more merchants and consumers turning to them to help reduce the spread of infection when making purchases.
In this article, we will be talking about every aspect of the evolving technology behind contactless payments. We’ve divided this guide into two sections – a) for consumers, and b) for merchants.
While this form of payment is slowly gaining traction, other countries are way ahead of the curve. According to a study,
Poland, currently standing at 99.9%, will soon become the first country to implement tap-to-pay at 100% of its checkout terminals.
As the above statistic shows, contactless payments are not a new concept. And yet, merchants and consumers all over the world are still not comfortable with the technology.
In this guide, we’ll be answering all your questions related to contactless payments including – why are they needed, how do they work, are they safe, and much more, including why AMP Payment Systems is who you should trust for your contactless payment solutions.
So, let’s begin!
What are contactless payments and why is there a need for them?
Contactless payments, in a very literal sense, are payment methods that don’t require any form of contact.
To expand on this, they’re a transaction that does not require physical contact between a consumer’s payment device (smartphone or card) and a point-of-sale (POS) terminal. The consumer holds a payment device (such as a card with the contactless symbol, dual-interface chip card, or your mobile device) near the payment terminal and the transaction is processed.
Right now, they are usually done in 3 different ways:
- Through mobile apps like Apple Pay and Google Pay (Android Pay)
- Payments via built-in contactless technology in your debit or credit cards
- Samsung Pay
Contactless payments can only be processed by card readers with Near-Field Communication (NFC) enabled. Besides the contactless technology, Samsung Pay also uses Magnetic Secure Transmission (MST) that allows traditional card readers to process payments.
While adaptation was initially slow, more and more consumers in the US are moving towards contactless payments as a primary method of payment. Among the top 100 US merchants, more than 75% are currently equipped with NFC enabled card readers.
This is true especially today. The Coronavirus (COVID – 19) outbreak has triggered an increase in contactless payments in the US to ensure social distancing and zero-contact payments.
But, even without the current epidemic, this new form of payment is continuing to grow at a rapid pace. Here are the top 3 reasons why consumers, as well as merchants, need contactless payments.
- They are super fast – can be completed in 15 seconds or less.
- They create a better consumer experience (see below).
- They are more secure and efficient (see below).
Even if they’re fast and convenient, are they really secure?
How do contactless payments work and are they secure?
The short answer is yes! Contactless payments, or any other form of digital payments, are completely secure.
Here’s how contactless payment technology works:
Let’s say that you are at a grocery store. For every transaction you make, your card sends a distinctive one-time token to a card reader at the payment terminal. Even your traditional card purchases at grocery stores or vending machines use the same technology.
- The one-time token sent during contactless payments does not have your card details. This means it is impossible for a fraudster to steal your card details while using it.
- The contactless technology uses 13.56Mhz radio frequency, meaning that a card reader must be in the proximity of 4-10 cms with your card to process your payment.
- Contactless payments made via apps like Google Pay and Apple Pay offer another layer of security in the form of a PIN code, fingerprint, or face scan.
When are contactless payments useful?
From shopping malls to vending machines, contactless payments can be used at any place that has a competent card reader or a digital scanner (for payments via app). They are simple, secure, fast, easy to use, and are useful, especially when you’re in a hurry.
NFC payments are also extremely useful in the current climate due to the lack of contact needed to use them, so there will be less chance of spreading the virus, or becoming infected. Imagine how many hands – healthy as well as infected – have touched a card reader at a shopping mall.
That’s why in a pandemic like the ongoing COVID – 19 outbreak, contactless payments play a huge role in flattening the curve of infection by ensuring social distancing.
How to accept NFC payments?
As a merchant, your Point-of-Sale (POS) must be equipped with an NFC-enabled card reader to accept payments via contactless technology. There are many card readers, such as a Square Reader, that can process transactions via both contactless and chip readers. As such, it’s always a good idea to keep an all-in-one card reader, for both traditional and contactless card payments, at the POS of your business.
Once it’s set up, it’s quite easy to use. As mentioned above, all you have to do is have the customer hold their phone or card up close to the reader and you’ll see either green lights appear, signaling it went through, or hear a chime sound once it’s processed.
How do NFC payments work with traditional merchant services?
Traditional merchant services, unlike all-in-one processors, offer different plans for conventional payments (via chip cards) and NFC payments. In such cases, check with your provider if your plan allows NFC payment. Having said that, you will need an NFC card reader to accept contactless payments for your consumers.
The NFC enabled card readers offered by AMP Payment Systems are the perfect solution to get you up and running in no time. We’ll get everything set up and enabled for your business so that you can begin accepting contactless payments. From the hardware to the software, to top-notch customer support, we’ll be there to guide you every step of the way.
Isn’t that easy? Enable NFC payments, buy an NFC card reader, and start accepting contactless payments right away!
- Can contactless cards be hacked?
No. Contactless cards transact using a unique token valid for one transaction only. This token doesn’t contain your sensitive card data. Also, your contactless card needs to be within 4-10 cms with an NFC reader to process a contactless payment, so it’ll be extremely difficult for a thief to try and use a scanner from a distance.
In simple words, even though contactless transfers are done through radio waves, a hacker cannot enable a transaction unless there is a callout for it. The good news is there have been zero cases of contactless cards getting hacked using a reader equipped with RFID.
- How can I keep my contactless card safe?
Though contactless payments are completely secure, you can take a few measures to keep your card safe. You can use an RFID blocking wallet to store your card, enable notifications for all transactions done on your credit or debit card provider, and check your transaction history frequently to make sure that all of them are authorized by you!
- How do mobile wallets work with contactless payments?
Payments through mobile wallets use the same technology as contactless cards: Near Field Communication (NFC). This contactless payment technology allows communication between your phone and a payment terminal by transferring data using radio waves. As such, a contactless payment using your mobile wallet can only be done if your phone is within a 2-inch range. Just like contactless card readers, modern smartphones come with a built-in NFC reader for digital payments.
- What is NFC technology and how does it relate to contactless payments?
Near Field Communication technology (commonly known as NFC technology) allows the transfer of data between a sender and a receiver when they are close enough. Contactless payments are powered by the same technology as there needs to be a wave of communication between a card and the payment terminal to process a transaction. This is the reason why a merchant needs to have an NFC card reader to process a contactless payment via your card!
- Can card information be read from the contactless payment card or device without the consumer knowing?
A contactless payment works using radio waves. This means to complete a transaction using your contactless card, the receiver must be within 1-2 inches of your card. Also, the token that is sent to the payment reader containing transaction data, doesn’t include sensitive information such as the credit card or debit card holder’s name, card number, etc.
In case a fraudster reads the contactless payment device, the security features designed for the payment terminal, the device, and the payment system would diminish the information that might be used for transactions.
While not quite mainstream yet, contactless payments are here to stay. So, whether you’re a merchant or a consumer, it’s important to get familiar with this technology sooner rather than later.
As a small business owner during these uncertain times, it’s imperative that you offer solutions that reduce the need for consumers to come into contact with POS systems, card readers, etc.
Enabling contactless payments will go a long way in easing customer concerns and have them be more willing to do business with you, knowing there’s less chance of infection. If you’re ready to get going with the future of credit card processing, contact us today to see how we can get you set up and taking transactions in no time.
Which NFC card reader are you using in your business? Let me know in the comments below!