Can Your Business Afford Not to be Contactless?ITFirst South Africa
Today’s tech has completely changed the meaning of the term ‘touch and go.’
We love the fact that it’s so incredibly simple to tap our credit or debit cards at the checkout and be on our way. And we’re not alone.
According to My Broadband from April to September 2020, 20% of all credit card transactions by Standard Bank customers were done online while 17% were contactless payments – those made by tapping or via mobile device. The article states that contactless spend at petrol stations increased by 608% y/y, 179% y/y at wholesalers, and 137% y/y at supermarkets and grocery stores.
Has your business upgraded to contactless payments? Is it worth making the change?
How Does Contactless Payment Work?
First things first.
A contactless or tap-to-pay is a payment method using a debit or credit card that utilises RFID technology and near-field communication. To pay for goods or services a customer simply taps his or her card near a point-of-sale terminal to make a transaction.
To accept contactless payments, businesses will have an enabled card terminal with a small symbol on it to identify the chipped card. When a customer taps the card chip onto the terminal’s symbol the information is transmitted electronically from the card to the bank.
Customers can also connect their cards to wireless devices such as a smartphone or smartwatch to use the contactless payment method. To use a device to make payments, an app must be installed onto the device to allow the use of contactless payment between devices.
Using tap-to-pay services is the easiest and quickest way to pay.
The Growth of Contactless Payment
Contactless payment was already popular even before the COVID-19 pandemic. However, the Coronavirus simply accelerated its popularity because tapping your card to make payments supports a germ-free environment. (This must have made the germophobes the first to make the switch!)
In February 2021, ABSA became the last bank to accept R500 as the maximum transaction amount for contactless payments. For amounts less than R500, customers can simply tap their card against a machine to pay for goods. This extra security measure was a necessary precaution as businesses felt their way with this new system.
There were concerns about the security of tap-to-pay services in South Africa, but banks have assured us that tap cards are just as secure as swipe cards.
In an attempt to not handle cash, 63% of South Africans said they used their contactless card and 52% used their smartphone or digital wallets as a payment method in the last year. We’ve always known that cash can be a little – well – gross, so a quick tap to pay is a great relief.
Advantages of Contactless Payment Methods
There are plenty of advantages for both the merchant and the consumer when upgrading to tap-to-pay methods. Take a look at them below:
- More secure: One of the advantages of contactless payment for the consumer and the merchant is that it’s less of a risk. This payment method is more secure compared to magnetic striped payments because the information transmitted from the card through the POS terminal is encrypted.
- Quicker transactions: Punching in a PIN takes more time – not much more, but enough to make it a bit of a pain once you’re used to tapping and leaving. Contactless transactions are fast enough to make a serious dent in those month-end queues!
- Cleaner: Neither cashiers nor customers have to touch terminals to make a transaction, which helps prevent the spread of germs and viruses.
- Better customer experience: Organisations that offer contactless payments provide a smoother checkout experience that customers appreciate. It’s another payment method that caters to customers that want to tap their cards as opposed to swiping or punching in ID PINS.
- Flexibility: Tap-to-pay is a flexible payment method because POS terminals accept tap cards or tap devices, such as smartphones. Therefore, if you accidentally leave your card at home, you’re able to use your device to make payments.
- Customer loyalty: As a business owner, you won’t run the risk of losing your customers to your competitors, because you’ll offer them the latest payment methods. Convenience wins – always.
What Happens If a Business Doesn’t Go Contactless?
Technology is always changing, and new trends arise when customers start demanding a specific service or product. With so many South Africans using contactless cards, you don’t want to be ‘that business’ that doesn’t provide this service.
Your customers are less inclined now to terminals or cash because it puts them at risk of contracting COVID. And since there’s a talk of a third wave, the need for tap-to-pay solutions will only increase.
If companies don’t want to lose customers, they must upgrade their payment systems so they can accommodate customers that prefer to tap their cards. Companies can still utilise their old payment methods to cater to other types of transactions, but these organisations must also offer the latest transaction methods to keep customers happy.
Popular Examples of Contactless Payment
Contactless payments will be available to all types of bank users whether you’re with ABSA, Standard Bank or FNB. However, other companies also offer contactless payment and they’re super-convenient.
- Google Pay: Using the Google Pay app you can make purchases using your mobile device at any brick-and-mortar store. So instead of using your card number, Google will use an encrypted number linked to your card so you can make payments. Users can send or receive money using a mobile number or email address.
- Apple Pay: Most Apple devices come with a convenient Apple Wallet app. This digital wallet allows customers to store their credit and debit card information onto an Apple device such as iWatch or iPhone. With the Apple Wallet, customers can make purchases through other third-party applications or online. What’s more, users can transfer money to their family or friends through messages.
- Samsung Pay: Similar to Apple, Samsung also released a digital wallet where customers can store all their card details. Customers can use their Samsung wallets to make contactless payments at checkouts. Furthermore, Samsung users can earn cashback rewards when they use their smartphones to make purchases.
Any merchant still dragging their feet in upgrading their payment machines to accept tap and pay may be positioning themselves badly for the future. Not forgetting that with a third wave of COVID-19 currently with us, people are reminded of the risk of physical contact with payment terminals.
If you would like to know how Huge Connect can assist you with your data requirements for upgraded payment systems, then give us a call.
Don’t lose customers because you have an obsolete payment system. Let Huge Connect provide you with the correct data services for your new and secure POS system.