What is a contactless payment?
A contactless payment means paying for products or services by tapping or waving a contactless device such as a card or smartphone over a reader. With a contactless credit card, you hold the card near a payment terminal (known as an RFID reader) and it picks up the signal, communicates with the card and processes the payment.
Benefits of contactless payments
Contactless payments are an alternative to cash and Chip and PIN for these reasons:
- Contactless payments mean you don’t have to enter your PIN.
- Contactless payments have extra security measures such as limiting the number of transactions you can make before needing to enter your PIN. Furthermore, there is a limit imposed on the size of transactions you can make. In that case, if your transactions exceed that limit, you will be asked to pay using Chip and PIN.
- Contactless devices make payments faster and more secure, as well as facilitating your everyday purchases.Contactless payment provides quicker transactions and shorter queues at the checkout.
- Some banks offer cashback and incentives when you use contactless payments.
- Businesses offering contactless payment provide a smoother and quicker checkout experience to customers, thus earning their loyalty.
- When using contactless payment, there is no extra cost or any additional processing fee.
- Contactless payments are protected against fraud by most issuing banks.
Challenges that lie ahead
Despite the benefits of contactless payments, the contactless payments have many challenges that lie ahead. Modern technology has managed to address these challenges effectively.
- Despite the fact that many card issuers make transactions easier and are working to raise awareness, some customers may be confused of how to use contactless payments.
- Contactless payments have a low transactions limit. Customers might still have to use a conventional payment method for larger purchases, which hindering their purchasing experience.
- Contactless devices may not work internationally. You may also incur an additional foreign transaction fee.
- The connection may be poor, so that customers would need to be prepared ahead of time with an alternative payment method. In case the customers usemobile contactless payments, they need to have an NFC compliant smartphone.
- Since contactless cards do not need to enter PIN, there is a fear of fraudulent purchases in case the card was lost or stolen. In that case, you should tell your issuing bank as soon as possible, so that it can cancel the card and send a replacement.
- Contactless payments have limited acceptance. Many countries are still heavily reliant on cash payments.
Accordingly, companies are embracing the benefits of contactless payment technology to empower their customers and invest in the future of business. The ease and convenience will be worth it!
