COVID-19 didn’t just change how consumers buy things. (Online shopping soared 40% last year.) It also changed the way they want to pay for things.
Before the pandemic, shoppers were satisfied paying with cash, credit cards, online payment services like PayPal, and apps like Apple Pay. Today – that’s old school. No one wants to deal with dirty coins and dollars or touching the often-used credit card readers that require typing in a zip code, a signature, or a touch to approve a purchase. With threats of new waves of infection, nearly four in five shoppers have made changes to the way they pay to remain socially distant. That includes shopping online when possible, using cash infrequently, and using contactless payment as much as possible. So, if your business still only takes cash and credit cards, it’s time to join the new school of accepting contactless payments.
Stats you need to know:
- In March 2020, the World Health Organization warned banknotes may be capable of carrying and spreading the coronavirus. While experts debate that, brick-and-mortar businesses are moving to minimize the risk of possibly infecting customers.
- Master Card surveyed 17,000 consumers in 19 countries and found they think contactless payments are “the cleaner way to pay.”
- Global iPhone users who activated the contactless pay app Apple Pay grew by more than 65 million people in 2020.
- Mastercard data shows a 40% growth in contactless transactions globally in the first quarter of 2020. Also, 80% of those transactions were for less than $25, a range typically paid with cash.
Tap to Pay
Contactless payment is just what it sounds like. A way for customers to pay for your goods and services without physically touching a point-of-sale terminal. The shoppers can use a debit or credit card, smart card, or another device with radio frequency identification (RFID) technology and near-field communication (NFC.) The NFC only works within a few centimeters of the objects so that there’s no danger of another merchant accidentally getting your payment.
The contactless cards have chips that transmit radio waves. Shoppers tap the payment card for two seconds near a point-of-sale terminal called an RFID reader, which reads the signal, communicates with the card and process the payment. If the sale is approved, the reader will issue a beep, green light or check mark.
Contactless cards are as secure as any other chip card, according to Visa and Mastercard. They have the same levels of security to protect the shopper and retailer from fraudulent or unauthorized transactions.
With contactless, the card or device never leaves the shopper’s hands, which makes it more secure. Also, some tap-to-pay apps require two-factor authentication like a fingerprint or a code to approve the transaction.
That being said, other studies show if your customer’s card is lost or stolen, fraudsters can make purchases below or at the contactless limit and early detection of the crime may be difficult. Consumers will have to contact their banks immediately if their cards go missing.
The most secure way to accept credit cards and protect retailers and consumers on the market today is still StagedPay™ by the software vendor Red Maple™. StagedPay prevents fraud, theft and data breaches by locking up credit card information into separate vaults. So, even if one vault is breached, cybercriminals won’t have anyone’s full identity or credit card data.
For consumers, safety also means touchless. A Visa study found more than half (63%) of consumers would switch to a new business that installed contactless payment options. In fact, 46% of global consumers say contactless payment methods are among the most important safety measures for stores to follow. Nearly half of shoppers (48%) would not shop at stores that only accept payments that require contact with a cashier or a shared device.
It’s big in Europe (and growing in the U.S.)
Businesses in Europe have recently dominated the acceptance of contactless payments. Some 78% of consumers overseas have been using tap-to-go for several years, with the highest use, 93%, in Czechia. Billions of contactless transactions have taken place in the UK and Europe over the past few years.
But a new Visa Back to Business study shows since COVID-19, 51% of American consumers now shop with some form of contactless credit cards and mobile wallets like Apple Pay. Also, 20% of small businesses have adopted contactless payments.
ResearchAndMarkets.com forecasts the contactless payment market size will grow in the U.S. to $18 billion by the year 2025.
Bonus Business Benefits
The major advantage of contactless payments is that transactions can be completed with the tap of a card which increases the transaction speed and makes it more efficient. Here are other benefits:
- Time is money. Accepting contactless payments is quicker than paying with cash. Tapping and paying takes an average 12.5 seconds, credit/debit card transactions take an average 26.7 seconds, and accepting cash takes 33 seconds on average, according to Passkit.
- Better employee experience. Not touching someone’s credit card or cash ensures employee safety and makes lines shorter. At the end of the day, there is less time spent counting cash.
- Contactless card features offer peace of mind for merchants by reducing the number of failed transactions, better sales and improved customer service. Most issuing banks protect contactless payments against fraud.
- Businesses can save even more time by offering customers the option of receiving their receipts by email or text.
- Providing contactless payment does not require an additional processing fee. Businesses pay the same fee as they would for a transaction with a regular credit or debit card.
If your business has antiquated systems, you’ll have to upgrade the technology. Also, some consumers still don’t have access to smart devices or the ability to qualify for tap-to-pay credit cards. Some banks still set limits on the amount of the purchase. So, retailers may have to deal with two forms of payment, depending on the size of the purchase.
Another downside worth considering is that the payment efficiency means there is less time to interact and get to know your customers. It can reduce the time you need to create that customer-brand interaction. The International Center of Shopping Centers (ICSC) found 73% of shoppers spend more money when they get good customer service. So, if you aren’t building relationships at checkout in brick-and-mortar stores, make sure your employees are helpful and listening to customers while they browse. The ICSC study also found that a positive experience at the store can make for powerful outreach. Seventy-three percent of consumers will recommend a retailer to peers after great customer service.
The pandemic has not lessened shoppers’ expectations of solid customer service. Nearly 50% of consumers told ICSC their expectations for friendly and knowledgeable employees, the ease of finding items, and the speed and ease of checkout are “considerably higher now” than they were before the pandemic.
- COVID-19 has created a need for faster, safer, more efficient shopping experiences in brick-and-mortar stores and online.
- Contactless cards are as secure as other credit cards, according to Visa and Mastercard.
- The benefits outweigh the disadvantages of contactless payment overall, especially with safeguards in place like StagedPay.
- Retailers can overcome the disadvantage of spending less time with shoppers at checkout by helping them find quality products and services that suit their needs.
- Touch-free payments are on the rise in the United States as Americans demand methods that are cleaner than paying with cash and public screens amid the pandemic.