Contactless Payments and COVID-19
In early March, an article in The Telegraph claimed that the World Health Organisation (WHO) warned COVID-19 may be spreading via banknotes, a quote amassed with confusing times which sent businesses into a bit of frenzy about getting rid of all things cash.
The jury is still out on just how likely it is to catch COVID-19 by touching surfaces or objects, including the contents of your wallet, change, and terminals. The WHO has since rebutted that claim, noting it was more important to focus on regularly washing your hands rather than running away from bills. Nonetheless, businesses and bank branches have already been caught working to minimize the risk of infecting customers through their payment methods and this change is here to stay.
According to a recent Mastercard survey focused on the implications of the coronavirus pandemic in the payments industry, 82% of respondents worldwide now view contactless as the cleaner way to pay, a whooping 74% state they will continue to use contactless payment post-pandemic, and ATM transactions are down by over 60% since lockdown began.
To reduce the need for physical contact during transactions and to minimize the access to PIN Pads, PIN-free card payment limits have been raised from £30 to £45 in the UK, and to an equivalent amount in 29 other countries across Europe.
Retailers are encouraging consumers to use low-touch or no-touch forms of payment whenever possible. The health concerns go hand in hand with the fuss of sanitizing equipment between payments.
The fact of the matter is that contactless payments have been utilized more than ever since the outbreak and consumers are unlikely to go back to tapping their PIN on a terminal if they can avoid it. The path forward for payments in-store was already guided towards utilizing contactless methods. COVID-19 merely accelerated this transition. So, when it comes to preparing your business, not only for the unfortunate pandemic times we are living in but also for the likelier future, you should work on your contactless options.
But what exactly are contactless payments and how do they work?
Contactless payments have been around since the 1990s, with very limited reach, being implemented only by a handful of merchants and retailers. The process of scaling contactless payments has been slow, but since then it has spread out to include thousands of banks, credit card companies, merchants, and retailers around the world.
A contactless payment refers to a secure method for consumers to purchase products or services using a debit, credit, smartcard, or chosen mobile device by tapping the instrument near a point-of-sale terminal equipped with contactless payment technology. When the system accepts the tap it signals the approval to the customer and the transaction is completed.
Contactless payments make use of near-field communication (NFC) technology which is designed to be used by devices in close proximity to each other. This means that the card/device can only be identified within a range of a maximum of 10cm from the terminal, which grants added security. Contactless payments can also be referred to as tap-and-go, tap, or, tap-to-pay by some banks and retailers.
In most cases, transaction sizes on cards are limited for contactless payment. The amount allowed for a contactless transaction varies between different countries and banks. Some merchants may even set a personalized limit for their contactless system to further prevent fraud.
The most obvious example of contactless payment use comes with cards. If your credit/debit card features the contactless indicator on either the front or back, it means it can be used to tap to pay at multiple POS terminals. Examples: Mastercard Contactless, Visa Contactless, ExpressPay (American Express), Quickpass (UnionPay).
Mobile Wallets also operate contactless. These apps allow users to store credit and debit card information onto their device to make purchases in stores, usually by scanning terminals for charges in-store. Examples: Apple Pay, Google Pay, Samsung Pay, Alipay, WeChat, MB WAY, OXXO Pay.
As the use of contactless becomes more widespread and, to some extent, more necessary than ever, new applications of the technology can arise. Uber recently unveiled the Uber Eats Contactless Order Feature, which enables customers to cover their bill via the app when dining at a restaurant.
How is contactless going to help you? What are the challenges that come with the shift?
Going contactless is very much a no-brainer by this point, but it’s relevant to understand how it can add value to your business past the demands of the current pandemic. At the same time, there are some not-so-great aspects you should take into consideration when handling the change.
+ Customer Experience and Convenience
Contactless payments are synonymous with convenient, simpler, and faster transactions. Between card-driven and smartphone oriented payments, contactless grants your customer more options and less of a reason to walk away from a purchase.
+ Operational Efficiency
Speedier transactions also mean less time waiting in lines for your customers. While the transaction time for a chip-enabled card can be as much as 30 to 45 seconds, a contactless transaction can reduce that to as little as 10 to 15 seconds.
+ Health and Hygiene
Although the decline of cash has been a decades-long trend, COVID-19 has sped up the transition to newer mobile wallets and tap-to-pay payment types mostly due to health and hygiene concerns. Consumers appear to be making a conscious choice to use payment forms that allow them to avoid touching a keypad or handling money.
+ No Added Fees
In the light of the pandemic, Visa was already caught delaying changes to interchange fees for debit and credit card payments. Contactless interchange fees for major credit card schemes are the same as the ones applied to chip and PIN transactions. For the time being, offering contactless won’t bring added expenses to your business.
+ Educational Resources
Met with the overwhelming increase in usage of contactless payments, companies like Visa have prepared free resources for merchants trying to learn more about how to use contactless and how to share instructions with staff and help consumers. There are plenty of resources available out there to support in the shift in case you’re just now getting into contactless.
- Security Concerns
While the increase in PIN-free card payment limits came to be in support of the novel contactless needs, the change does raise questions about the security of payment transactions going forward. When using contactless, the customer doesn’t have to insert any information for authentication. This provides a window during which fraudulent purchases can be made while the card owner is unaware of the card’s loss. Retailers also cite concerns with cybersecurity and data privacy risks (65%), an uptick in fraud (63%), and more chargebacks as a result of disputed purchases (61%).
Do not just follow the crowd. Consciously choose contactless today and gear up for the future.
COVID-19 has forced many consumers to form a habitual behavior that is likely to stay with them. Looking at contactless as a temporary solution for an unfortunate situation is not good business. Instead, focus on educating your merchants and teams about the benefits of contactless payments and provide them with the tools and teachings to move forward. Your customers will thank you.
Aiming to learn more about how to enable contactless solutions at your store? Talk to Switch about our Terminal Application(/product/terminal). Besides enabling contactless payments in your point-of-sale, the application is fully agnostic for communication with multiple payment providers and payment methods. With a single integration, you can spare your developers from tedious implementation efforts.