From Apple Pay to tap cards to charging clients using QR codes via Venmo, it’s been a few years since contactless payment became less of a novelty and more of a — hint hint — Norm.
Still, 2020 brought new challenges to the payment processing world — and new advantages to businesses who offer contactless payment for customers or clients. But how do contactless payments work, and which approach is the best one for your business? More importantly, are they secure?
We spoke to financial industry experts to get the scoop on how mobile payment works, what makes a transaction technically a contactless payment, and whether accepting mobile payments is a good idea for small business owners and service providers.
In this article:
- What are Contactless Payments?
- Are Contactless Payments Safe and Secure?
- What Makes Contactless Payments Safe?
- What Are the Disadvantages of Contactless Payment?
- What Are the Benefits of Contactless Payment?
- How to Pick the Right Contactless Payment Option for Your Business
What Are Contactless Payments?
Before we dive into how safe it is to accept a contactless payment — and some of the advantages and disadvantages of offering mobile payment options at your business — let’s briefly go over what people mean when they say “contactless payment.”
The truth is, people often use it as an umbrella term for many different things:
- Chip or “tap” cards, platforms such as PayPal and Venmo
- Card-not-present transactions using a processor like Square or Stripe (or Schedulicity’s built-in payment processor!)
- Mobile wallets like Apple Pay (sometimes referred to as “mobile payments”).
- Payment and ordering apps like PayPal, Venmo, Schedulicity’s self-checkout option Norm, and even DoorDash, Postmates, or Caviar, where all transactions occur within the app
Send the bill straight to your client’s phone with Norm by Schedulicity. Ditch the card reader, speed through payment, and bump up tips. Available now on Schedulicity.Learn more about Norm
So what actually qualifies? Technically, there are contactless payment platforms and then there are platforms that use contactless payment.
“The first thing to understand is that Square, Stripe, etc. aren’t exactly contactless payment platforms,” says payment industry expert and owner of Redde Payments, Kristin Uptain. “Contactless payment platforms would be NFC (near field communications) or mobile wallets such as ApplePay, Android Pay, etc. These platforms allow you to tap or transfer money without having to touch or handle a device using pin debit.”
So, Stripe, Square, and other payment processors (including Schedulicity’s built-in payment processor) offer contactless payment options, like checkout with Apple Pay or card not present transactions.
Since the start of the pandemic, though, “touch-free” anything has become marketing gold, so you’ll hear “contactless” thrown around more loosely these days. The point is: platforms that offer contactless payment options give you an alternate, potentially safer way to charge customers or clients without physical cash or cards exchanging hands.
Are Contactless Payments Safe?
Contactless payments are as safe as any other form of credit card transaction, which is pretty darn safe. According to the New York Times, “Contactless payments are safe (at least as safe as dipping your card in a reader).”
A recent article “Here’s How the Pandemic is Completely Changing How We Pay” by The Points Guy takes that a step further: “Contactless payments are not only more convenient but also more secure — and now more sanitary — than swiping your card.”
TLDR: As long as you choose a reputable payment processor for your business, you can feel confident that your customers’ or clients’ information will be stored safely and securely.
What Makes Contactless Payment Safe?
Contactless payments are secure largely because of how private financial information gets passed. “Most mobile and digital wallets use tokenization, which assigns an alternate number to your stored payment card to ‘mask’ the original card information,” says Mason Miranda of Credit Card Insider. “These numbers are changed regularly, and each transaction gets a unique code. So, if a thief were to steal that card information, they would only have limited access to your card, if any access at all.”
Compare that to the possibility of losing your wallet on a subway or accidentally dropping cash on your walk home from the grocery store.
If you’re a small business owner considering offering contactless payment to clients, you can feel confident that your payment processor will protect your clients’ information — and take responsibility for that information rather than putting the responsibility on you. (While we’re on the subject: Don’t write down or store your clients’ payment information anywhere yourself. A spreadsheet or Post-It note is decidedly not safe.)
What Kind of Money-Maker Are You?
Let’s talk money, honey! Spend it, save it, hustle for it.Take the Quiz
What Are the Disadvantages of Contactless Payment?
So, we’ve confirmed that mobile and/or contactless payment is safe, but are there other disadvantages to offering it? Beyond certain privacy concerns, here are a few cons to offering or accepting contactless payment:
“When your card is on file using platforms like Google Pay, internet connectivity is a must,” says Uptain. “If you are trying to pay somewhere that your device cannot access its internet connection, the transaction cannot take place.”
Of course, this is less of an issue these days when there’s a mobile hot spot to be had almost anywhere, but it’s something to consider.
Learning Curve for Not-So-Tech-Savvy Clients
Not every client or customer will want to checkout using contactless payment, especially those from a pre-Steve-Jobs generation. That means you’ll need to help them through the process, especially if you decide to go fully contactless. If you use a platform like Schedulicity, you’ll have the flexibility to still accept cash or check or swipe cards as needed — a great way to accommodate anyone who wants to stick to the classics.
What Are the Benefits of Contactless Payment?
Speed and Convenience
Whether you accept PayPal or use Stripe, the checkout process gets much quicker when you’re not keying in transactions or counting change. And if you’re using Norm with Schedulicity, it’s as quick as sending a text message to your client to pay or having them scan a QR code.
They’re PCI Compliant
Contactless payment platforms are held to extremely high standards, particularly PCI compliance. Those standards get updated as the industry evolves. That means a lot less room for human error — and, potentially, fewer chargebacks.
More Environmentally Friendly
While there’s plenty of info out there to help businesses recycle their old card readers, there’s no doubt that credit card devices are another unnecessary hunk of plastic to fill our landfills.
Forget About Software Upgrades or Buying a New Device
With old-school credit card devices, there are software upgrades and newer versions to keep up with, meaning you have to purchase a new device or replace your device if it breaks. That’s a hassle for you and, more importantly, it’s an additional cost for you and your business.
Switching to mobile payments or going completely device-free keep things simple: no device to purchase and no worries about devices breaking.
Less Contact with People and Surfaces
There’s a reason contactless payment is booming — right now, the less contact you have with surfaces and people outside your household, the better.
Clients Can Pay from Wherever They Are
Going device-free opens the door to remote payments as well, so your clients can pay you from wherever they are.
For example, why not let parents pay for their kid’s haircut from the car? Or why not let clients pay from home by texting them a link to pay? You could even let your client pay right from the salon chair while their color sets.
Built-In Tip Calculations
If you’re in the business of providing services, chances are you rely on tips to make your revenue goals (or you really appreciate them as an added bonus). Using a payment processor, like with Schedulicity Unlimited, means that tips are built right into the checkout process, which is a great way to increase your tip revenue.
How to Pick the Right Contactless Payment Option for Your Business
Make Sure They Accept All Credit Cards
Have you ever tried to pay for a meal with an AmEx only to hear that the restaurant doesn’t accept it? Annoying. A great payment processor should accept all credit cards without charging extra for certain cards. (Schedulicity Pay checks this box.)
There’s an added security perk here as well. “…Visa, Mastercard, AMEX and Discover. These are all the major card brands,” says Uptain. “They essentially set the standards and regulations within the payment industry. Accepting these credit cards will ensure another level of security for your business when accepting contactless payments.”
Look Out for Hidden Fees and Compare Processing Rates
Every credit card payment processor takes a small percentage of each transaction, but the rates can vary wildly. Compare processing rates on different options before deciding what’s right for you. Look for other fine print fees as well.
One thing to note: every payment processor applies chargeback fees (even if you dispute them), so you’ll want to follow best practices to avoid chargebacks in your day-to-day business.
Make Sure Your Payment Processor Integrates with Your Other Tools
If you’re using online booking to run your business, you’re going to want to choose a contactless payment system that easily integrates with that process. Check to see if yours offers payment integrations, and for which platforms, or pick a platform that has a built-in payment processor you like.