Complete Guide To Contactless Payments
If you haven’t caught the revolutionary payment method bandwagon yet, there’s still time to get in line!
The contactless payment trend swept us away faster than any other revolutionary trend in the payment sector – while it took ATMs decades to achieve trust among consumers, contactless payments knock that out of the park within just a couple of years.
Ready to see what all the fuss is about?
But what is contactless payment? Contactless payments can refer to credit cards, debit cards, key fobs, smart cards, and Fitbit Pay which use radio-frequency identification (RFID) or near field communication (NFC) for completing secure payments.
Is it all just a well-executed maneuver of the tech giants (Google, Apple, Samsung) to take over the world in an attempt to monopolise momentum on the Internet of Things? While aggressive marketing strategies from these tech giants wage digital wars over top-of-mind awareness?
Let’s ask a rhetorical question – do you need this technology for your hippie, cool-vibes locale or any other small business? Since 2007 when Barclaycard pioneered contactless payments in the UK this method of payment has gained so much traction that 59% of UK consumers now use contactless. Add to this the fact that in 2020 new regulations will require all card terminals in the UK to be contactless enabled and you can see why the above question is indeed rhetorical.
For a quick rundown, here are the main facts:
- The costs for adopting the contactless payment technology will not torpedo your budget since most modern POS systems and card terminals/readers already support it. The marketing and stuff training costs will also compensate in the long run for the implementation of contactless payment.
- There are currently over 38 million contactless cards in circulation across the UK and the adoption rate is due to increase. Add to this mobile payment applications like Apple Pay or Android Pay and you have a trend that is on the rise. The result? Higher revenue for merchants like you and a better customer experience!
- All modern card terminals and readers are EMV-compliant even when contactless payments are processed which means you can still benefit from the liability shift. Read on to find out more information on how you are protected even for high-value transactions!
It’s always important to check the two sides of the coin before making any informed decision and to analyse profusely the needs and goals of your business. Not everything flying high on the tech or ecommerce radar can benefit your company. Contactless payments are currently challenging the inertia of traditional payment methods to the point of no return – you’ll have to implement it whether you like it or not eventually. But the adaptation process may prove to be slightly confusing or problematic for many entrepreneurs and proper training combined with valuable guidelines will smoothen and streamline the process for both you and your employees. Are you on board with us so far?
Let’s get on with the obvious – your revenue will increase. In the UK, consumers normally have £70-£80 in their pocket (wallet) on any given day but the way they break the notes is rather meticulously done so there’s always a minimum of £30 left aside (shopaholics excluded). That’s not the case with any type of credit or debit card since the guilt of “breaking notes” is considerably minimised. With contactless payments, the dissolution of the shopper’s guilt is further accentuated since there are no reminiscences of card transactions such as swiping or introducing the PIN code. This will result in 30% more spending compared to traditional credit cards, according to research conducted by Mastercard. Your customer will just tap and pay – their partner will probably worry about the weekly budget later!
Which brings us here – it’s flashing fast! Once you go contactless, any other method of payment will feel like slow-motion since contactless payments save you an average of 15 seconds against a cash transaction and 7 seconds against a PIN & Chip transaction. According to a research by Worldpay 71% of UK shoppers think that contactless is easier than Chip & Pin. Time is indeed money – your customers pay more and faster!
With novelty comes the C Factor – it’s really COOL for Millenials to flaunt their brand new gaudy smartphones publicly on any occasion, and paying “futuristically” for a cup of coffee definitely connects with their take on the world. Do make sure to clearly market your contactless payment method right at the counter/till with creative and ingenious ways so your customers won’t ask you for it. Flaunt your new devices around just as extravagantly as your tech-savvy customers and you’ll both be on the same wavelength… literally!
Inevitably – shorter queues! Provided you offer solid training to your employees and they won’t blabber around when customers present their mobile phone to pay, the contactless method can really render the long queues in the past and reduce cash handling.
Increased security – While a few years ago and even presently, many consumers went paranoid about the security of their bank accounts with contactless payments or even developed conspiracy theories on how the banks were finding new ways of ripping customers off, this couldn’t be further from the truth. According to Howard Lewis (money expert from Mastercard), fraud ensued from contactless payments is less than 1% of all fraudulent card transactions. Criminals are still generating ingenious methods of fishing out information as this payment method becomes more and more popular and prevalent, but overall contactless payments are among the safest options you have.
If you make a quick addition of all these advantages, the result can be only one – Superb customer service!
And the cons?…
First off, you might be at that point in your journey (business) when you cannot afford to renew your entire POS system or credit card machines; or your remote mountain-perched restaurant might not be frequented by tech-savvy Millennials. While this revolution is here for everyone, it comes in waves and you must determine if an immediate investment in new equipment is lucrative for your business. Do keep in mind that if you sign up with any reputable merchant account provider, your credit card terminals are equipped with EMV and NFC chip technology.
Costs associated with marketing and training – No, you do not need to fetch a university professor to teach your staff nor do you need to become a marketing guru. It’s more about common sense and thinking on your feet! When it comes about your employees it is important they understand the not-so-complicated technicality of accepting contacting payments. If you do not feel confident enough to explain how it works, you may ask your merchant account provider to offer you a free session in person or over the phone. Otherwise, check out our super simplified guidelines down below.
Don’t go overboard with extended promotional material – there’s no need to cram up the streets with posters of your brand new contactless payment machine. A creative and semi-discrete approach is what works best. Brochures neatly thrown in with the menu of the day on the table, or simple stands in front of the counter will suffice. For retailers, the main drawing businesses of contactless payment customers, printed signage and posters advertised at the front entrance and throughout the store will definitely hook the customers in.
Accepting contactless payments in your store is easier than you think – they don’t call it “tap and go” for nothing! Whether you’re a layman or a technofile, the process of completing a contactless payment will not throw you in at the deep end. Here we show you the ropes of navigating this very straightforward process.
|Via Bluetooth or cable|
|2 or 3 windows will appear to complete this step|
|Check for the white or green LED flash|
|Via NFC or RFID (remove any metal objects away from the reader/terminal)|
|Instructions will pop up on your tablet/smartphone/POS|
|It takes less than 3 seconds|
|Manually introduce customer’s email address and ask if they want it to be stored for future purchases|
Contactless payments will only get more fine-tuned in time to suit the increasing demands of merchants – do make sure you send your feedback to your merchant account provider to ensure a progressive evolution of this payment method!
Be honest – you are indeed concerned that this limit might deter your consumers from shopping in your store/restaurant and consequently you might experience reduced footfall. Here’s why you should not be bothered by this limit:
Shoppers who use contactless payments are happy with the limit and according to a Worldpay research, 65% of them would worry if the limit were to be lifted. However, it is expected that by 2020 this limit will be raised in the ballpark of £50-£60 anyway.
This limit is not actually set in stone – Does High Value Near Field Communication Payment ring you any bells? Your POS system (software) is in fact the key here, not the terminal or reader you are using and with biometric authorization (fingerprint or facial recognition on smartphones) there is no limit. A case in point is Apple’s Touch ID or more recently Face ID through which the customer’s identity is authenticated. Therefore, with Consumer Device Cardholder Verification Method (CDCVM) there is an added layer of protection that allows modern POS systems to accept limit-free contactless payments.
Half of the contactless payment terminals in the UK are now equipped with the technology to take Apple Pay transactions of any value. So make sure when you buy or rent a new POS device, the software is updated to support high value payments.
Reluctance to respond fast to new trends and technologies is completely normal and to be on the safe side, as a small business it is always recommended to wait 1 or 2 years at least until the market matures. At this point, contactless payments are becoming rather ubiquitous and any transaction limit so far has been implemented only to ensure customers’ security.
You might be at that point of making contactless payments your primary method of completing in-store transactions, come hell and high water! While hell and high water might definitely be a concern, chargebacks are much worse than that. How well protected are you against fraud and what is your liability?
The fabulous news is that most terminals and card readers in the UK are EMV-compliant which reduces your liability through a series of cardholder verification methods (CVMs) such as signature, Chip & Pin, or Consumer Device Cardholder Verification Method (CDCVM) for mobile devices. However, for low-value or low-risk transactions there is no CVM – in most cases.
If the transaction limit is not exceeded this should not be posing any risk to your business. In case the value is higher or there are multiple purchases, your customer will be prompted for a PIN code or other verification method. Apple Pay requires Touch/Face ID or passcode for all transactions and you will benefit from the liability shift in all instances.
As you can probably tell, protecting yourself against chargebacks and liability with contactless payments does not require the sweat of your brow. So, stay confident and go get all those well deserved sales!
While contactless cards are a rather straightforward payment solution, when it comes to the tech giants whose phones we all carry around there is a degree of differentiation. As a merchant you will process all contactless payments the same way regardless of your customer’s app and device but let’s dig a little bit into what happens on your customer’s phone. This will help you better understand the process and might even give you some tips on how to assist your shoppers.
- Apple Pay – As previously discussed, Apple Way uses Consumer Device Cardholder Verification Method (CDCVM) for contactless payments. This means that when the customer hovers their iPhone over the credit terminal, they will be asked to authenticate biometrically (on the most modern devices). This offers you the greatest liability shift of all contactless payment methods.
- Samsung Pay – Unlike Apple, Samsung does not really require customers to introduce a PIN code or to identify themselves biometrically when the transaction is being made. However, a security process (PIN, fingerprint/iris scanning) proceeds this step when the customer opens the mobile app. The downside is that this process is still considered no CVM. On the plus side, Samsung Pay is the only one working with magnetic stripe readers too.
- Android Pay – Google went the extra mile to shorten the contactless payment method even further. Unlike its rivals, Android Pay doesn’t even require customers to open the app after it’s been installed. Your customer simply needs to tap their smartphone on the card terminal and the transaction is complete in the blink of an LED. Your customer needs to introduce their PIN code for debit card purchases and for high-value credit card transactions a signature is required.
Change and progress in payment transactions are unstoppable with new technologies on the horizon and the market is approaching a mature status. If you have ever wanted to jump on the contactless payment bandwagon now is the time to do it!