Many shoppers report feeling safer if they can avoid touching any surfaces during checkout. The trend is toward contactless payment. After some initial concern about the potential for spreading Covid-19 via cash, the WHO has stated that cash itself does not carry a significant risk of spreading the virus. However, shoppers are now more sensitive to their health and safety in general, and this is speeding their adoption of contactless technology.
Touch-free has other benefits as well. According to a report from Mastercard, touch-free reduces checkout time and increases spend. Contactless payment makes it more convenient for shoppers to spend small amounts of money as well, so they may buy when they wouldn’t have bothered before. Forbes reports that transaction times decrease from 30-45 seconds for chip cards to 10-15 seconds for touchless.
Touch-free payment requires a customer component and a merchant component. The customer can use a credit card enabled for touch-free payment or a phone with a contactless payment app like Apple Pay, Google Pay, or Samsung Pay. A key fob or smart watch is also an option. The merchant needs a point-of-service (POS) terminal or stand-alone reader that can interface with these payment methods. Most POS systems accommodate touchless, but you can also set it up through PayPal, Shopify, Square, or QuickBooks.
If you haven’t set up a contactless card reader, you can still accommodate customers who prefer to go touchless. An alternative is accepting payment via QR codes.
What’s a QR code? A Quality Response (QR) code is a square-shaped barcode that acts like a link. Customers can scan the QR code using their phone’s camera or a special app. This links the phone to a payment app. PayPal, Square Cash, and Venmo all have a QR code option for accepting payments.
It might seem that making a payment by tapping a wallet or waving a phone would just invite hackers to take advantage of the situation. However, these payment systems use a technology called NFC that only connects at a distance of 4 inches (10 cm) or less. Although all payment systems have some cybersecurity risks, Visa reports that contactless payment devices use the same security technology as credit cards with chips.
For increased security, merchants have the option to require a pin or signature with cashless payments, although most don’t. It seems to defeat the purpose of going touch-free. Credit card companies will sometimes require cardholders to use a pin when they first activate their contactless card and from time to time, as a way of deterring fraud.
Even QR codes have become more secure. According to Forbes , in 2017, a new generation of technology was integrated into QR codes so that they now have a level of security similar to the NFC technology used in touchless credit cards.
So, should you get on the bandwagon and start accepting contactless payments? And how should you go about it? Here are five simple steps for navigating the process:
Five Steps for Implementing Cashless Payments in Your Business
1. Consider whether contactless payment is a value-add for your customers. Speak directly to your customers and evaluate whether they fit the profile of the contactless shopper.
2. If you decide to move forward, research your options. Identify which payment methods you should accommodate. NFC? QR codes?
3. Check with your POS or payment system provider to see if they have an option already integrated with their platform. Most do. Is it enabled by default or do you need to request activation? Another option is a separate stand-alone system.
4. After you educate yourself, train your cashiers or waitstaff and develop materials for educating your customers. American Express offers touchless payment educational materials.
5. Don’t forget to solicit feedback from your staff and customers so that you can optimize your processes and make your new payment methods as simple as possible for everyone involved.
Visa recently reported that contactless payment transactions are doubling every year in the U.S. Contactless payments are likely to remain a popular payment method even after the pandemic. It’s worth considering whether touch-free makes sense for your business.
Making the transition might seem intimidating, but the Los Angeles Small Business Development Center is here to help. We can connect you with an advisor who will help you build a strategy for implementing contactless payments. You’ll be up and running in no time! Call 866-588-7232 to be paired with an expert business advisor or request an appointment online.
Jocelyn Graf advises on business startup, scaling, and strategy for the Long Beach Small Business Development Center (SBDC) and the Bixel Exchange SBDC at the Los Angeles Chamber of Commerce. Jocelyn enjoys guiding others who dream of owning a tech startup or traditional business through the process of envisioning, launching, and growing their own enterprises.