Why You Should Consider Taking Contactless Payments

These days, contactless payments are commonplace.  Take a look at the newswire for the payments industry and you’ll see an alarming and interesting trend starting to emerge.  Every other week or so, it seems a large major national merchant is announcing that they are now taking MasterCard Paypass and Visa Paywave.  Contactless payments seems to finally be making a impression on Canada.  And while it seemingly took a decade for Canada to “get caught up” with this technology, believe it or not, we’re actually the second largest region in the world when it comes to contactless payments.

So as a smaller merchant, you’re probably wondering if this is technology that you should consider.  The value proposition for contactless payments is very obvious for some while not so for others.

Contactless Payments Increase Transaction Speed

First, consider the improvement in the speed of service.  All three major card brands (Visa, MasterCard and Interac) now have their own contactless products available.  PayWave, Paypass and Flash all operate on the same value proposition.  They remove the requirement for an insert of a card and keying in of a PIN.  So when a customer chooses to pay with by contactless transaction, you are essentially removing the human factor of inserting the chip, keying in the PIN and in the case of Interac, choosing whether it’s your chequing or savings account the transaction is debited from.  This could cut the entire transaction time by more than half.  An obvious benefit if you have lineups of customers where abandoned purchases could be a risk.

Decrease Fraud with Contactless Payments

Consider also the fraud mitigation aspect.  By removing the PIN from the transaction, you instantly become less attractive to a fraudster looking to compromise your pinpad.  If they are only able to obtain half the requirement of a card (the card number itself), the information is useless because without the PIN, and the card number is not useable.  Also, all card brands have a transaction limit (under $50) where the merchant is protected against any chargebacks and disputes.

The Real Benefit of Contactless Payments:  Mobile Transactions

But if you’re still thinking to yourself, “But I don’t need to get my customers through a lineup quickly and I don’t get a lot of chargebacks anyway”, here’s why you should still consider implementing contactless.  The contactless technology used today by the cardbrands is essentially the foundation for mobile transactions (and as we’ve warned you previously, mobile is COMING!)  So what this means is that from what it looks like today, once you’ve enabled your terminals to accept contactless payments, you are able to accept the payments regardless of the form factor.  So whether the transaction originates from a plastic card or from your mobile phone, you will be ready.  So if you’re interested in getting ahead of the curve and being one of the first merchants ready to take mobile payments, this may be something you want to consider.

So while you may not be a fast food restaurant with lineups around the corner for lunch or a merchant who is targeted for fraudulent activity, contactless is still something you should give strong consideration.  Mobile payments will be the norm eventually in Canada, so why not get some of the legwork done now by implementing contactless payments, instead of trying to play catchup to your competitors later?`


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Matthew Hunt has been helping small businesses get set-up with Canadian Merchant Account Services since 2007 and helped 1000's do so. Join Matthew on Google+.

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