The Rise of Contactless Payment Systems

The Rise of Contactless Payment Systems

Dennis Snider

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Traditional payment systems that require the manual manipulation of currency are being phased out and contactless payment options are replacing or supplementing them for touchless transactions. Chip-enabled cards, mobile wallets, and QR codes show real promise in an age of disease spread.

As a small business owner, you may be considering an upgrade or supplement to your point of sale (POS) system to provide contactless payment to your customers. Adding some form of this technology has many benefits and can be simple to implement.

One of the many challenges for business owners during the COVID-19 pandemic has been the sanitation requirements needed to keep employees and consumers safe during the payment process. Contactless options have been very effective in cutting down on the time and cost for sanitation. A recent study by Visa reported that 20% of small businesses have adopted these solutions for just this reason.

The concept of the mobile wallet is transforming the way we shop. Mobile wallets from providers like Apple, Google, and Samsung have gained popularity for their simplicity and security. Deeper data encryption provides a greater level of security and RFID hacks decrease significantly. Issuing banks are more willing to protect against fraud which means your dispute rate drops. The ultimate benefit is the efficiency and speed it brings to your business process, translating into a more positive customer experience and the potential for increased loyalty.

There are two contactless payment technologies to choose from: near field communication (NFC) and quick response (QR) codes. As the leader in North America, NFC transactions require two devices equipped with an NFC chip. Many credit card providers have released cards embedded with the NFC chip and newer smartphones support mobile payments with two-way NFC communication. When chips come within close range of one another, magnetic induction charges them and gives them enough power to transfer data, requiring less power and promoting faster data transfer than Bluetooth.

QR codes are the most popular contactless method internationally. Most consumers have already used the digitized square and are familiar with the scanning process from their smartphone camera. The link to a payment portal simplifies the selection of preferred method of payment and amount, and payment approval notification provides clear feedback to both buyer and seller.