Successful businesses are those who take advantage of the ever-changing environment by adopting new business models. Most of them are utilizing the unparalleled capabilities of technology to encourage new consumer behaviors and promote spending patterns on their target customers. To succeed in an ever-competitive global market, it’s important to acclimate and recognize these changes.
During the COVID-19 pandemic, digital payments have kept businesses running and helped customers reduce contact with the virus. Contactless payments, mobile wallets, and digital prepaid cards have made payments a seamless experience and kept small businesses running during an uncertain time.
As shoppers migrate online during the pandemic, companies took advantage by setting up their own virtual storefronts and investing in contactless payment technology. With its ability to provide convenient, fast, and secure transactions, experts believe contactless payments will be the status quo for consumers and businesses even after the pandemic. So if you’re planning to use contactless payment methods in your business, here’s what you need to know about this new payment solution.
How contactless payment works
Before diving into the benefits, it’s important to know exactly how ‘contactless payment’ works. To start accepting contactless payments, businesses need two things: a payment terminal that uses near-field communication (NFC) technology and a payment processing platform.
Contact payment solutions support NFC technologies and radio frequency identification (RFID), which use transponders and radio waves to facilitate communication between devices and systems. A payment solution uses NFC for two powered devices, such as payment terminals and smartphones, while RFID involves a powered reader and an unpowered tag.
Contactless payment activities rely on the connection of NFC-enable devices and RFID to banking or credit institutions and a point-of-sale (POS) system, allowing transactions without any contact. Through the “tap and go” technology, it allows the customer to make a transaction by tapping the card or device on the terminal.
Compared to cards and other traditional payment methods, contactless payments are more secure because the system encrypts the payment data and prevents the replication or forging of magstripe cards. Meanwhile, mobile wallets involve an added verification method by requiring the customer to confirm the transaction through the device using a password, PIN, or fingerprint.
Forms of contactless payments
Contactless payments are exactly what they sound like: it’s a payment method that doesn’t involve any physical contact between the customer and vendor. This payment solution offers a secure method for customers to purchase products and services using credit, debit, smartcard, and other payment devices. The entire process does the exact opposite of what cash, checks, and magstripe debit and credit cards do.
There are different types of contactless payments: NFC-enabled cards, mobile wallets, and in-app purchases.
NFC-enabled cards allow the customer to submit payment data to a point-of-sale (POS) terminal by swiping the contactless debit or credit card at the payment reader. Meanwhile, mobile wallets such as Samsung Pay, Google Pay, and Apple Pay, and bank applications allow the customer to pay using their smartphone and transmit the payment data to the POS terminal through NFC technology.
In-app purchases, on the other hand, are any online purchase supported by an application. All transactions happen within the app with no physical transaction involved. Payments transmitted through a digital platform or website are called digital payments, which are also contactless by nature.
Advantages of contactless payments
As the name goes, contactless payments reduce the possibility of physical interaction and spread of bacteria through cash and physical cards. Including contactless payments in the business has become imperative in the current environment where people must observe social distancing because of the COVID-19 pandemic. This gives the people the peace of mind that they don’t need to make physical transactions to submit their payments.
Contactless payments are also more secure than regular bank cards. They make it harder for cybercriminals to breach since every transaction requires user authentication. Even if the hacker steals the information from contactless payment providers, there’s no way to obtain the customer’s valuable data.
Another benefit is the quicker checkout times. Through contactless payments, customers no need to wait in long lines since there’s no need to sign or enter any PIN, making it easy to submit the payment. This method also allows businesses to handle multiple customers during checkouts instead of assisting them one by one.
If there’s one thing the COVID-19 pandemic has done good to the business economy, it would be the adoption of new payment trends. Contactless payments have opened a lot of possibilities for businesses to stay afloat during the pandemic, from limiting in-person interactions to helping customers access their essentials from the comfort of their homes. If you want to take advantage of this new payment solution, make sure to include contactless payments in your business’s payment mode.