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contactless-payments-guide-small-business.html

by Kaiti Norton

Contactless payment options are becoming increasingly popular. These solutions offer a variety of benefits for small businesses.

Unlike traditional payment systems, contactless options enable customers to pay for goods and services without needing to physically touch anything that has been handled by previous customers. These types of payment systems include chip-enabled cards that your customers can use by tapping against your point of sale terminal, mobile wallets that your customer might have on their phone, and QR codes that can be scanned to complete a transaction.

As a small business owner or IT administrator, you may be considering upgrading your current point of sale (POS) system to one that includes support for contactless payments. Or, you may be interested in learning how you can add a contactless option to supplement your current hardware. Regardless of your existing system, adding some form of contactless payment option has many benefits for your customers and business processes, and it can be fairly simple to implement.

Benefits of contactless payments

One of the many challenges that COVID-19 has presented to owners and operators of businesses of all sizes is the constant sanitization that is required between customer interactions. As such, contactless payments have proven to be an effective solution that cuts down on the number of times a POS system needs to be cleaned as well as how often a customer needs to sanitize their credit cards. It makes sense, then, that a recent study from Visa has reported that 20% of small businesses have adopted contactless payment solutions in response to COVID-19.

Opportunity for a loyalty program

Likewise, mobile wallets (Apple Pay, Google Pay, Samsung Pay, etc.) have gained popularity for their simplicity and security. Not only are mobile wallets projected to transform the way we shop in the not-too-distant future, but they also present an opportunity for you to introduce a loyalty or rewards card that can be stored alongside your customer's debit and credit cards. Software vendors like PassKit or PassSlot offer user-friendly platforms that can help with designing, distributing, and managing a tailored loyalty program for your customers' mobile wallets.

Better security

Additionally, contactless payment offers better encryption and security than traditional credit or debit cards that use a magnetic strip and a PIN code. Each time a customer uses a contactless payment method to complete a transaction, none of the data that's transferred can be decrypted to reveal their actual card number or banking details. They also eliminate the risk of RFID hacking, so your customers can rest assured that their information won't be stolen when they use tap-to-pay or mobile payments. Most issuing banks protect contactless transactions from fraud, meaning you won't have to worry about filing a dispute to get your money.

Improved customer experience

The ultimate benefit of contactless payments, however, is the efficiency it will bring to your transaction process. While paper money or credit card swiping on an older system can stall a quick-moving cash wrap, contactless payments can make most transactions effortless and swift. This means your customers can have a more positive experience and you'll be able to service more customers. 

How contactless payments work

Contactless payments can be completed using one of two types of technology: near field communication (NFC) and QR codes. You may find that one suits your needs better than the other, or that adopting both solutions in some way is the best approach for your business. To understand which method you should choose, it's helpful to compare the technology that NFC and QR codes require.

NFC transactions are the leading contactless payment method in North America. They require two devices, each equipped with an NFC chip. Many credit card providers have released new cards that contain an NFC chip, and newer smartphones support mobile payments using two-way NFC communication as well. The chips (or tags) don't contain any power on their own, but they do contain a small amount of magnetic polarity. When they come within a very close range of one another, the magnetic induction charges them and gives them enough power to transfer data. This distance is usually a few inches or less, depending on whether a customer is tapping a credit card or holding an NFC-activated smartphone near the NFC terminal. In this way, NFC works very similarly to Bluetooth, but requires less power and the data transfer happens a bit faster.

Alternatively, QR codes are the most popular contactless payment method internationally. This type of payment involves minimal extraneous hardware; instead, customers scan a QR code using their smartphone camera and are presented with a link to a payment portal that allows them to choose their payment method and in some cases the payment amount. Once the payment is approved and completed, both you and your customer will receive successful transaction notifications. Many person-to-person payment platforms like PayPal support digital QR codes already, so these solutions might be ideal if you already use them for other business transactions.

Contactless payment solutions for small businesses

As a small business owner, you can feel confident that there is a contactless payment solution you can implement without spending a ton of money. These solutions can range from supplemental to full service, depending on your needs and budget:

  • Solutions like PayPal Here and Shopify POS offer simple tools to bring the contactless online experience to your physical storefront. This type of solution presents a perfect opportunity to integrate mobile payments with existing e-commerce processes.

  • Vendors like Square offer a variety of solutions that can update your existing systems to include contactless payments for in-person transactions. Even if you can't afford to update your entire system or don't want to put forth the effort to change it, you can find a balance of new and old that will work for you.

  • If you're not sure where to start but have an accounting software you trust, they may offer a POS system that supports contactless payments like QuickBooks GoPayment.

Depending on when you purchased your current point of sale (POS) technology, it may require an upgrade to support NFC transactions, or you may be able to enable it with the right software. It may seem overwhelming to even know where to begin, so tools like TechnologyAdvice's POS System Product Selection Tool can help guide you along the way—enter your information and an expert will match you with personalized recommendations to help you find the right solution. 

This article was originally published on Thursday Nov 5th 2020
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