Contactless payments are gaining significant popularity as a payment method. The Raydiant report shows over 80% of retailers used contactless payment methods in the previous 12 months. If you are a merchant or business owner curious to understand what is contactless payment, how they function, the various types available, their benefits, and how to integrate them into your business, then this guide is tailored for you.

What Is Contactless Payment?

Contactless payments make it easy for customers to pay for goods and services without using cash or swiping a card on a Point of Sale (POS) device. So picture this; Imagine paying for your goodies without  cash or card swiping drama. That’s contactless payments for you.  They are also referred to as touchless payments, tap-and-go payments, or proximity payments. Contactless payments uses either radio-frequency identification (RFID) or Near Field Communication (NFC) technology. During a purchase, the radio waves communicate with the merchant’s payment reader within 10 centimeters or less of proximity, for payment to occur.

Types of Contactless Payments

There are different types of contactless payments consumers can use to complete transactions. 

1. Contactless Cards These cards resemble traditional debit or credit cards but are embedded with an NFC chip that facilitates contactless payments as well as Chip and PIN transactions.  For example, contactless cards, such as the NowNow debit card. They are also known as tap-to-pay cards and can be used by either swiping or tapping the card on a compatible terminal.

2. Mobile Wallets and AppsMobile wallets and apps enable users to securely store their payment card information on their smartphones. For instance, Apple Pay, Samsung Pay, and Google pay are examples of contactless mobile payments apps. 

Users can turn their smartphone into a contactless payment device. This allows users to use their smartphones instead of physical contactless cards for payments.

3. Wearable Devices Wearable devices like smartwatches, fitness trackers, and even jewelry such as wristbands, necklaces, rings, and earrings can be used for contactless payments. Once RFID technology is applied to these devices, they can be tapped near a payment terminal to complete transactions.

Advantages of Contactless Payments

1. Fast Transactions

Contactless payments are notably faster than other payment methods. Transactions can be completed within seconds, aligning perfectly with the fast-paced world where time-saving is crucial.

2. Security

Contactless transactions are highly secure and encrypted, ensuring the safety of payment information against fraud. The use of passwords for digital wallets adds an extra layer of security.

3. Convenience 

Customers no longer need to enter a four-digit PIN for every transaction. They can simply wave their card within 10 centimeters of the payment terminal to make payments. Additionally, they can securely pay using their smartphones, leaving their physical cards at home.

4. Very Hygienic

Pre-contactless era, you’d need to reach for your wallet, hand over cash, and get change—all of the above involves touchy transactions.

Now, with contactless payments, you sail through the process without touching a thing. No passing cash, no exchanging cards.

5. Enhanced Customer Experience

Contactless payments provide an improved checkout experience for customers due to their speed and efficiency.

Disadvantages of Contactless Payments

Despite their advantages, contactless payments do have some drawbacks:

1. Limited Acceptance 

Contactless payments may not be widely accepted, particularly among small businesses with budget constraints. Additionally, issues such as smartphones or cards lacking NFC capabilities can hinder adoption.

2. Transaction Spending Limits 

Banks often impose limits on the amount that can be spent using contactless payments from an account.

Is Contactless Payment Safe?

Contactless payment methods are considered safer than traditional payment methods. Contactless cards use EMV technology, which is more secure than older magnetic stripe (magstripe) technology. Digital wallets also employ password protection as an additional security feature. This eliminates the need for cardholders to carry their physical cards, reducing the risk of loss or theft.

How to Accept Contactless Payments

If your business already accepts credit card payments, integrating contactless payments into your POS system is relatively straightforward. Many terminals are already equipped to accept contactless payments.

We can help

NowNow helps you accept payment easily, and receive instant payment alerts from your customers. Find out how you can use MyBiz solutions to set up multiple payment options like POS, QR code stickersTapTap contactless payments and mobile wallet for your business

Bottom Line

To summarize, Contactless payments offer benefits for businesses of all sizes, providing fast and secure transactions that enhance customer satisfaction. With the increasing popularity of contactless payments, it makes sense for merchants to know what is contactless payments and consider including them as part of their payment options for customers.

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