Managing the Contactless Payments Rush

Managing the Contactless Payments Rush

The State of Retail Payments study conducted for NRF revealed that between January and August of last year, touchless payments increased for more than two-thirds (69%) of surveyed retailers. Of those that had implemented contactless payments, almost all (94%) said they expected the rise to continue over the next year and a half.

This contactless payments rush comes with both benefits and drawbacks. On one hand, contactless payments have allowed merchants of all shapes and sizes to better serve health-conscious consumers during a global pandemic. On the other hand, it has not come without a cost. 

Both mobile and contactless card payments present additional pain points for merchants, including the need to upgrade credit card processing hardware. With the rush in contactless payments, it was estimated that retailers were on target to spend about $1.6 billion last year. 

But costs alone should not be a deterrent for merchants considering their contactless payment acceptance options, especially considering the impactful benefits. 

Contactless Payments are Fast

Contactless credit card transactions can process in as little as half a second -- a rate that is nearly 7 times faster than when consumers pay with a chip & PIN card. How much money would your organization save if payments took less time? What’s more, public health concerns still loom large, and contactless payment options allow people to flow in and out of stores safely and quickly, avoiding long lines and clusters of people. Not to mention, contactless payments result in fewer people touching devices with their hands which reduces the spread of germs.

Contactless Payments are Secure

While some merchants may have concerns around security, touch-free payment options offer more security. For starters, contactless payments mean customers don’t have to hand their physical credit cards over to anyone. Meanwhile, people can steal credit card numbers they can’t see when mobile devices are transmitting the card data. Payers also aren’t required to enter their pin or sign a receipt. Instead, contactless payments rely on cryptographic security, ensuring that mobile wallets aren’t accidentally charged. In-person payment methods must be placed within 2 inches of a card reader for a sale to process, minimizing the risk of erroneous charges. 

Additionally, contactless transactions -- like their chip card counterparts -- use unique encryption codes to secure payment card data. This can offer customers additional peace of mind about how their sensitive payment information is being used. 

Contactless Payments Can Lead Consumers to Spend More

According to a Mastercard study, consumers who used touchless credit cards spent 30% more than those who used swipe cards in the first 12 months of receiving the card. This spending rate remained consistent across segments, including consumers who fell into low-, medium-, or high-spending buckets. 

Meanwhile, college and university students tend to only carry mobile phones with digital wallets rather than physical credit cards. They’re focused on convenience, and you have to ask yourself, “How am I going to serve these clients?” If you can’t accept contactless payments, where else are those students (and their payments) going when it’s time to grab a meal?

Another study conducted in the U.K. found that university students had different spending habits when using a contactless payment method. In fact, the study showed that touchless cards facilitated easier small, spontaneous purchases without the guilt that comes with more involved payment methods. 

If you’re considering how contactless payments may help your organization but are unsure of where to start, contact Arrow Payments today for a free consultation. We can help you sort through the benefits of contactless payments for your success.