By Dan Baker is a Content Writer that works with Total Processing
In recent years, contactless payments have become increasingly popular with shoppers and businesses alike, to the point where many people no longer carry cash with them. Contactless payments are made by tapping your contactless card or a device over a contactless card reader, which then processes and accepts the payment.
Contactless cards are by far the most popular means of contactless payment. However, payments through smartphones with secure contactless systems, such as Apple Pay or Google Pay, are also becoming more popular. In addition, the use of contactless-enabled fobs or wearable devices, such as smartwatches or rings, can be used for contactless payments.
With a range of benefits, such as faster and easier transactions, increased security and fraud protection and loyalty benefits for users, it is unsurprising that contactless payments have become so popular. However, are contactless payments truly better than other payment options, such as chip & pin? Below we will cover some of the pros and cons of contactless payments, so you can make an informed decision.
The Advantages Of Contactless Payments
Contactless payments boast several advantages to both consumers and businesses compared to traditional payment methods. So, what are the advantages of paying for your shopping with a contactless payment?
Benefits for Consumers
Ease of use – Contactless payments have without a doubt made paying an easier process. Contactless cards are a fast and convenient way to pay for your shopping and are accepted in most major stores. All users have to do is simply tap their contactless card against the reader and pay in a matter of seconds.
Customers no longer have to enter their pin or handle cash at checkouts, which makes transactions quicker and cuts down on time spent queuing, speeding up the whole process for both consumers and cashiers.
Safer transactions – When contactless payments were first introduced to the UK in 2007, many people questioned how secure it was. However, just like chip & pin, paying with contactless payment is safe and secure. The chip technology protects users from any fraudulent purchases through encryption and dynamic data technologies. In addition, if you lose your card or it is stolen you can quickly freeze the account and contact your bank who will then disregard and amend any fraudulent payments made.
Certain contactless payment methods also set a limit on the transaction amount. In addition, there can also be a limit on the number of times you can use contactless payments in a day. Credit and debit card issuers also perform security checks from time to time which asks you to enter your pin and verify a contactless transaction.
The flexibility of payment devices – In addition to making transactions quicker, contactless payments provides consumers with added convenience, thanks to the range of payment devices. Contactless payments aren’t restricted to just cards. In fact, the NFC technology within contactless readers means shoppers can make use of smartphones, watches and contactless cards, letting them pay in a way that suits them.
Loyalty benefits – Many of the loyalty programs offered by stores are connected with the contactless payment device that you use to pay. This means they can automatically confer discounts, add loyalty points and gain rewards all at the time of payment. In action, some banks also offer cashback and incentives when you use the contactless payment feature.
From The Business’s Perspective
Better operational efficiency – With transaction lengths reduced by contactless payments, queues are less likely to build up, meaning less staff will be required behind tills, allowing them to be distributed on the shop floor, improving customer experience. In addition, contactless payments help to reduce the time staff need to spend counting cash or operating card machines.
Better customer experience – Businesses that offer a contactless payment option provides their customers with a quicker and smoother checkout experience, which improves customer experience and helps earn customer loyalty.
Contactless payments also help to reduce the number of abandoned checkouts as customers are no longer constrained by the amount of cash they are carrying. In addition, stores can optimise their loyalty programs to work with contactless payment options and remove the need for discount cards or loyalty cards.
No extra cost – Providing a contactless payment option doesn’t require any additional processing fees for businesses, meaning there are no extra costs. In addition, many businesses will be able to update their card readers to contactless card readers with little to no costs with certain providers.
Fraud protection – In addition to being more secure for customers, contactless payments technology is encrypted to discourage any hacking attempts. In addition, better transaction security means that businesses can easily get their money without any difficult disputes. Most banks also protect against fraud with their contactless payments.
The Disadvantages Of Contactless Payments
Despite these many advantages, contactless payments do also have their fair share of concerts for both users and businesses. Many of these issues are being addressed effectively, but they can still be a concern to potential users.
Concerns For Consumers
Limited acceptance – The number of retailers who facilitate contactless payments has increased in recent years. However, there are still many shops that do not take contactless payments, especially amongst independent retailers. The number of retailers accepting contactless payments should continue to increase in the coming years.
Low transaction limit – Many card issuers implement a transaction cap as a security measure that prevents transactions over a certain amount from being performed via contactless payment. This can be an issue for some customers and hinder their overall shopping experience. However, this limit has recently been increased in the UK as a response to the pandemic and to encourage contactless payments.
Technical limitations – There are some technical barriers when it comes to contactless payments through smartphones. Your smartphone will need to be NFC compliant if you want to use it to make contactless payments.
Limited international availability – Contactless payment devices are still limited when it comes to international travel. Despite similar technology, some mobile wallets used for contactless payments are not accepted abroad or will incur a foreign transaction fee.
Security concerns – Because contactless payment transactions don’t require any PIN authorisation, there is a fear that lost or stolen cards can be used to make fraudulent purchases. However, most banks give you a 100% fraud guarantee, ensuring any fraudulent transactions will be resolved.
Disadvantages For Businesses
Security concerned customers – Despite being backed by a robust fraud detection system and multi-layered security, there are still many consumers who are wary of using contactless payment. This cautious mindset can be a deterrent to businesses adopting a contactless payment system.
With so many benefits to contactless payments, it is no wonder more and more businesses are beginning to offer contactless payment as an option for their customers. In addition, with availability increasing every day and security concerns diminishing, there has never been a better time to try out contactless payments.
So, whether you are a customer eager to enjoy the ease of use, flexibility and safer transactions or a business looking to improve your customer’s experience, protect yourself from fraud or enjoy better operational efficiency, if you haven’t embraced contactless payments yet, you should start thinking about joining the club.
About The Author:
Dan Baker is a Content Writer that works with Total Processing, a leading provider of bespoke payment solutions for businesses.