There’s no question that COVID-19 will change the way we all do business going forward. More organizations will adopt work-from-home practices, and contactless payment, which is already increasing in usage, will become the new way we make payments in physical retail environments.

Don’t be late to the party – the world of payments is advancing quickly, and preparation is critical. If there was ever a time to consider implementing a contactless payment system, the time is now.

In this post, we’ll teach you everything you need to know to accept contactless payments. We’ll evaluate the pros and cons, and explain the potential impact it can have on your business.

What Are Contactless Payments?

You’ve probably seen a contactless payment taking place at some point, even if you weren’t aware of what was happening. Does this scene sound familiar?

A customer walks up to the register. The cashier rings up their items and announces the total. The customer whips their phone across the top of the terminal swiftly, like a ninja with a sword – and suddenly, the transaction is complete. Nobody swiped a card, and no one entered a PIN or zip code for verification.

What you just witnessed wasn’t magic or sorcery; it was a contactless payment taking place.

Contactless payments take place when a customer waves their smartphone or credit card across the top of a credit card terminal in a store, and the system instantly records the payment. Unlike legacy cards, contactless cards allow you to pay over a secure radio interface.

In technical terms, tap-to-go payments use a technology called Near-Field-Communication or NFC. This chip technology enables card readers to read information from a customer’s credit/debit card or enabled device. NFC isn’t necessarily a new technology – it’s a form of RFID. Businesses have used radio-frequency identification for years to streamline many tasks like scanning inventory and providing keyless access to office buildings.

Contactless credit and debit cards use chip technology, emitting radio waves that can be picked up by NFC-enabled readers within a distance of 4 centimeters, or about 1.5 inches. Once the terminal picks up the signal, it processes the payment immediately.

Why Should You Offer Contactless Payments?

Tap-to-pay credit cards are becoming more popular among consumers – especially today, where distancing is a part of life. Digital wallet services like Google Pay, Apple Pay, and Samsung Pay have made contactless payment possible through mobile phones, and credit card providers are ramping up their promotion of tap-and-go cards.

If you’re wondering just how fast this sector is growing, consider this – global contactless payments are expected to hit $2 trillion this year, and will triple to $6 trillion by 2024, according to Juniper Research reports. Although only 3% of U.S. cards were contactless in 2018, consumers in North America will drive almost a quarter of future purchases, accounting for $1.5 trillion in contactless purchases each year by 2024.

Until recently, America has been slow to adopt contactless payment technology – but its popularity has recently spiked in response to the spread of COVID-19. According to Visa, 31 million Americans tapped a card or used a mobile device for payment in March 2020, nearly 50% more than had done so six months earlier.

Furthermore, MasterCard reported a 40% jump in contactless payments during the first quarter of 2020. A survey of American consumers in April 2020 showed a 16% drop in consumers that were likely to pay with cash.

How to Accept Alternative Payment Methods in Salesforce

While the U.S. is only now catching on to contactless payments, the rest of the world has already adapted to this new way of making payments. For American consumers, only 0.18% used tap-to-pay for transactions (as of 2018), while outside of the U.S., NFC-enabled purchases make up 60% of all face-to-face retail payments.

Contactless payments have become the preferred way to pay around the world. In Australia, over 75% of face-to-face Visa transactions are tap-and-go; and in Hong Kong, contactless face-to-face Visa transactions have tripled in only 18 months.

U.S. businesses have been hesitant to transition to contactless payments, but many of their customers have already made the switch. To serve your customers most effectively, you need to provide them with the payment method options they are most comfortable with.

What are the Benefits of Contactless Payments?

There’s no reason that businesses shouldn’t be using contactless payments today. Tap-to-pay systems provide an array of benefits, with minimal drawbacks. Integrating this type of system is better for your business and customers and provides safety, security, and convenience.

  • Safety – Hygiene is important, especially in pandemic situations. Retailers don’t typically sanitize card terminals between customer usage, and as a result, germs can be transferred from one person to the next as they engage with the payment hardware. With contactless payments, customers never touch the terminal or PIN pad. Instead, they only make contact with their card or mobile phone, isolating any germs and decreasing the likelihood that it will spread to the next customer.
  • Security – Contactless payments provide a level of protection that traditional magnetic stripe cards can’t achieve. They require different information than other cards. Instead of transmitting the cardholder’s name, security code, and billing information from data contained in a magnetic stripe that can be copied, a one-time encrypted code transmits from the credit card or phone to the reader. NFC makes it extremely difficult for anyone to steal a customer’s card information – whether manually or electronically. Additionally, when you and your staff can’t touch, see, or hear a card number, it makes it much easier to achieve PCI compliance.
  • Convenience – Security doesn’t always pair well with convenience. The introduction of EMV chip cards, for instance, vastly increased the security aspect of card payments, but drastically slowed down lines in grocery stores and other retail locations. Contactless payments combine security and speed, allowing transactions to complete in a matter of a few seconds. These payments enable customers to get through the line faster and gives your business the opportunity to process more transactions in a shorter period. 

These three factors have always been important, but they are even more critical today. Customers are more cautious about the spread of germs – they don’t want to touch surfaces unnecessarily, or spend extended periods standing in line. Contactless payments provide them with the freedom to transact more securely and quicker than they ever have before.

Breaking Down Myths About Contactless Payments

Every payment method carries some risk. Cash can be lost, and hackers can duplicate mag-stripe cards. In comparison, contactless payments are one of the most secure forms of payment. Since tap-to-go is a relatively new concept in the payment industry, some consumers question whether it is as secure as claimed.

Just how easy is it for someone to steal a customer’s payment information when using NFC payments? Let’s dig in a little deeper.

Can The NFC Signal Be Intercepted?

As a touchless system, contactless payments rely on radio waves sent from a card or device to a NFC-enabled terminal. One could argue that this leaves room for someone with a scanner to steal the customer’s information during a transaction. Technically, it is possible. But in reality, it’s much less of a concern.

NFC sends a short-range signal of around 1.5 inches. To steal data, a hacker would need to have a scanning device positioned within this range. Some critics claim that a customer could have their data taken from their wallets by a stranger with a scanner walking by them in the store. However, the Identity Theft Resource Center has stated that this threat doesn’t exist in real-life situations.

But what if a hacker could scan information from the card – how significant would the threat be? The risk is probably not as intense as you think.

Contactless cards incorporate tokenization to secure the customer’s data further. The token is randomized, producing a unique set of numbers and symbols that represent your card data. Each time you use the card, it creates a new token. If someone were able to scan a customer’s information while making a purchase, the token would become useless after the customer completes the transaction.

Learn More: Tokenization
Is It Safe Storing Payment Data on a Mobile Phone?

With contactless payments, it’s possible to leave your credit card at home and use your mobile phone to make payments with NFC terminals. However, this presents a concern for some customers – if your mobile phone is lost or stolen, does that mean someone else can access your payment information? Again, the answer is technically yes, but in real situations, this threat is minimal.

To make a payment with your device, someone would need to unlock the phone, and then log into whichever app you use for payment. You can also wipe most smartphones remotely if they are lost, deleting any sensitive information stored on the device.

In comparison, it is safer to lose your phone than to lose your credit card. Your phone has additional protections to keep unwanted parties from accessing its information, while someone can charge a credit card with just your zip code.

The World of Payments is Shifting, Are You?

There’s no getting around it – the wave of contactless payments is coming. The question is, are you prepared for it?

Implementing contactless payment is simple; all you need is an NFC-enabled payment terminal, and your business can begin processing tap-to-pay payments immediately. The Chargent Terminal, for instance, provides you with all the point-of-sale capabilities you’re used to, plus additional features like NFC technology, multiple receipt options, and Salesforce integration.

Talk With a Salesforce Payments Expert