Touchless Payments: A Result of the COVID-19 Pandemic
The technology for touchless payments (also called "tap" or "contactless") has been around for a while, but customers continued to prefer the tactile experience of punching a PIN pad or signing with a pen. With touchless payments, customers need only hold their card near a payment reader.
The COVID-19 pandemic changed many things, including customers' perceptions about when it is safe to touch things such as pens and point of sale equipment. This may mean a shift in attitude toward touchless payments.
Touchless card readers work differently than traditional card readers, because they use near-field communication to read the card. NFC devices communicate between an active device (the POS terminal) and a passive device (e.g., credit card, smartphone apps such as ApplePay or a fitness device) using radio waves. Both devices can transmit and read information. The distance between them cannot be greater than two inches for NFC to work.
When a purchase is made, the system prompts the customer to bring his or her card or device close to the terminal. Once the purchase is accepted, the customer receives a signal and the transaction is finished. The transaction is completed more quickly and with fewer touches than traditional ones.
Touchless readers are identified by their logo, which looks like a Wi-Fi logo (four curved lines) turned on its side.
Security is one of the big issues with contactless payment, but a number of measures are in place to mitigate these concerns:
- Two inches between devices. The devices read each other at a distance of no more than two inches. It would be very difficult for someone to try to get between the devices without anyone knowing.
- EMV secured. The EMV standard requires card details, which are stored on the magnetic strip of traditional cards, to be encrypted and tokenized. In addition, any attempt to break into the secured information will cause it to self-destruct.
- Credit limits. Each card brand (MasterCard, Visa, American Express, Discover) sets a credit limit, which is low. A PIN is required if a customer exceeds that limit. Additional precautions can be set as well, such as if the customer makes multiple purchases in a short time.
There are downsides to using this NFC technology:
- The technology is not widely accepted in the United States, although it made up 20% of transactions in Australia, Canada, South Korea and the United Kingdom, according to a 2018 report by A.T. Kearney.
- It can be expensive to buy and set up.
- Since PIN entries must be done manually for some payments, the transaction is no longer touchless.
- The system is not set up for expensive purchases.
Nevertheless, businesses that regularly take in-person payments from their customers, such as retailers and restaurants, should consider looking into it in order to keep up with this futuristic trend.