When it comes to a merchant's use of point of sale (POS) systems, modern advances in technology have changed the way transactions are completed. Payments have become more efficient and safer than ever before, thanks to contactless payments.
These systems utilize near field communication technology (NFC) and can complete payments with a simple tap of the buyer's credit card or smartphone.
There are different forms of contactless payments, from credit cards and smart cards to smartphones and even wearable technology like watches and rings. The main operating systems that offer contactless payments include Google Pay, Apple Pay, Samsung Pay, or other mobile applications that support this technology.
Contactless payments now account for more than 50% of all transactions in Australia, Spain, the UK, and France. Currently, the smartcard or contactless card is the most widely used contactless form of payment, and this segment of the industry is projected to reach $65 billion by 2025. This payment technology will only continue to grow in global usage, as research projects that within the next 5 years, 53% of global POS transactions will be contactless.
How Contactless Payments Work
NFC technology powers contactless transactions through radio frequency identification (RFID). This RFID technology has already been in use for years when scanning groceries or tracking packages, for example.
The NFC used in contactless transactions is a specific radio frequency that enables the device or card to communicate with the payment reader when in close proximity (usually a maximum of 10 centimeters). This mobile POS technology allows cardholders to tap or hover their smartphones or credit cards over a payment device, rather than manually swiping or inserting into a chip reader.
Some of the most widely used forms of contactless payments include the following.
- Apple Pay
- Samsung Pay
- Android Pay
- Contactless EMV
The Advantages of Using Contactless Payments for Businesses
Businesses should consider enabling contactless payments for transactions as they are able to leverage the following benefits.
Contactless payments can work twice as fast as traditional payment processes, completing transactions in just 15 seconds. As less time is spent on processing and cash handling, businesses can enjoy faster turnover rates during customer purchasing processes. With faster transactions, queues can be shorted and the number of staff assigned to the check out point can be reduced, allowing more of the team to service customers on the shop-floor.
Contactless payments are much harder to hack. This is due to the process of authentication, such as the Face or Touch ID technology in mobile payments, which provides an extra layer of security. Additionally, when it comes to contactless card payments, the data associated with the card on file is encrypted and always changing.
Having the option to pay with a contactless credit card, as well as watches and smartphones, allows buyers to experience more flexibility in their shopping experience. If their card is forgotten, customers can still make a payment on their mobile devices. Investing in a payment terminal that accepts contactless payments is a simple way for merchants to give customers more of this freedom and ease of purchasing.
4. Enhanced Customer Experience
With faster and more flexible payment options comes a better customer experience, which benefits both the consumer and the merchant. Abandoned sales due to customers not having enough cash on hand, or forgetting their wallets, will be less of an occurrence with contactless payments. Additionally, spending less time at check out lines in contactless-enabled stores will further enhance the customer's shopping experience, encouraging them to return in the future.
Enabling contactless payments will not only provide more security and enhanced customer experience, but businesses can also reap the rewards of more efficient operations and higher instances of returning customers. The popularity of contactless payment technology is only expected to grow in the future, and therefore, is worth the investment for any business, regardless of size.