How do contactless payments work?
Contactless payments operate on a radio frequency between two devices. They use Near-Field Communications, also known as NFC technology, to talk to one another when nearby. Typically, an NFC transaction includes an NFC credit card and a retailer’s POS system.
All customers must do is wave their payment past the terminal. As the two devices ‘talk,’ they exchange information and complete the transaction. Customers may use an NFC-enabled credit card or a mobile wallet on a smartphone, smartwatch, or key fob.
How is payment exchanged?
When a customer uses contactless payment, their system sends a single-use token to the POS. The token doesn’t carry specific card details and is only good for a single transaction, unlike a standard credit card that you use repeatedly at every retailer.
How do customers benefit from contactless payments?
Customers benefit from contactless payments in a few ways. They started as a more convenient way to pay and get out of the store. In today’s times, though, they also serve to protect customers from the virus by reducing the number of items they must touch in the store.
How do retailers benefit from contactless payments?
Retails benefit from a faster process, just like customers do. However, retailers like the faster process because it keeps lines down and reduces the risk of customers abandoning their carts. With faster moving lines, retailers are better able to keep more customers.
Are NFC payments secure?
It may seem like NFC payments wouldn’t be secure, but they are even more secure than magnetic strip credit cards – here’s why. It’s easy for hackers to duplicate magnetic stripe credit cards. They can’t, however, replicate NFC payments because the information is encrypted and doesn’t contain the actual card information, but rather a single-use token.
What hardware do retailers need to accept NFC payments?
Retailers who want to accept NFC payments must have an NFC-enabled POS system. Most new systems have an NFC reader built in. If you have an older system, you may be able to add an NFC reader to the system, but discuss your hardware needs with your POS provider to make sure.
You’ll find NFC-enabled equipment for both countertop POS systems and mobile systems. They all accept the same types of payments but have different functions and capabilities.
What are the PCI compliance concerns with NFC payments?
Like any credit card transaction, all NFC payment transactions must be PCI compliant. Fortunately, you don’t need special software or equipment to make sure this happens. All new POS systems and add-on equipment to accept NFC payments have the software built-in.
Before you can accept NFC payments, you must register the device with your payment provider. Your payment provider will then provide the approval to accept NFC payments. This gives the payment provider the information they need to track all transactions in the event that fraudulent activity occurs and protects both you and your customers.
Should you advertise that you accept contactless payments?
Yes, all payment providers suggest that you advertise that you accept contactless payments. They provide branded signage you can put at the front of the store and by the register. Mastercard claims that displaying signage makes customers more than 2 times likely to take advantage of the opportunity.
How can you encourage customers to use NFC payments?
Besides teaching customers about the security of NFC payments and the lower frequency of fraudulent activity compared to magnetic striped credit cards, your associates can walk customers through the process, showing them how it works. Retailers can also offer rewards to customers who choose contactless payments versus standard chip and swipe card transactions.
Do all credit card payment providers use contactless payments?
No, not every payment provider has adopted NFC payments yet. If you want to accept contactless payments, make sure you talk to your payment provider about their ability to accept it. If they haven’t adopted it yet, it’s best to look elsewhere as most customers today look for the option of contactless payments.
Who used contactless payments first?
While the use of contactless payments is still heating up in the United States, Canada and Europe were the earliest adopters. Most credit card payment companies in the United States, however, are pushing for use of the service, especially with COVID-19 and its risks.
Is a signature required with contactless payments?
In most cases, there isn’t a signature required for contactless payments. However, if customers spend beyond a certain limit, a signature may be required for security purposes. Overall, there isn’t a limit that consumers can or can’t spend, but they may have to have a little contact if they have to sign for the purchase.
Is there an extra charge for retailers to accept contactless payments?
No, the processing costs are the same for most payment services providers. Because the transaction is even more secure, payment service providers prefer contactless payments to reduce the risk of fraudulent transactions.
Can thieves steal your NFC card information?
Even though there are portable NFC card readers that thieves can get their hands on, they won’t do them any good. First, they’d have to get within a very close distance to the cardholder’s wallet. Second, because the information is tokenized, even if thieves were able to get their hands on the information, it wouldn’t do them any good.
Should you lease a payment terminal?
Payment services providers have many options for credit card equipment but try avoid leasing the equipment. Instead, purchase the equipment you need, just make sure it is NFC-enabled. If you are unsure about the payment services provider, you can also go on a month-to-month contract giving you a way out should you know like the service.
Should you accept NFC payments?
All retailers should accept NFC payments, especially during the pandemic. You may increase your customer loyalty and even increase customer satisfaction with a faster process and smaller lines.