Payments today give consumers a range of possible payment methods. Gone are the days of just cash or credit. Now, you can buy your daily coffee or that smart TV you’ve been wanting with cash, credit, check, Google Pay, Apply Pay or another type of digital wallet.
Tap and go, or contactless payments, are popping up all over with the help of new technology in payment terminals. With the help of what is called Near Field Communication (NFC), credit cards and digital wallets on your smartphone or smartwatch can complete your purchases with something as simple as a tap on a screen.
People are running on different schedules at all times. When you might have time to count out 47 cents one day, the next you barely have time to scribble a signature to authenticate a payment. NFC software allows people an additional option that they don’t even need a wallet for.
Although credit cards with chip readers have NFC built-in, your smartphone and smartwatch are also enabled with the technology. If you’re running around and don’t want to dig through a purse or wallet to find your card of choice, you can simply pull it up on whichever screen you’re using, tap and your payment is complete.
You might wonder how the tap and go technology actually works. NFC means that a scan at the payment terminal can capture purchase data from either a chip reader or a digital wallet. When you dip a card, each scan code has encrypted data that isn’t decrypted until it reaches the receiving bank. When you tap a card, the payment data is sent to the terminal via radio frequencies. Unlike dipping, the tap and go does not require a PIN or signature.
While safety might be the main concern with tap and go payments, the reality is that EMV payments of any type, including tap and go, are getting stronger and more secure than ever. As mentioned above, the payments are completed using encrypted data and what makes that payment data so secure is that it changes with each payment that is made.
Magnetic stripe cards used the same data for every purchase and the magnetic stripes could be much more easily copied than chip card readers. Hackers would have to know what the data looks like for every purchase if they want to steal credit card information on credit cards with chip readers.
While dipping cards allows the payment terminal to collect data and authenticate payments internally, the tap and go method speeds up the process just a bit and doesn’t negatively affect the level of security of your transaction.
Rather than transferring a card number during the transaction, tap and go works through the use of tokens and radio frequencies. When you tap your card or digital wallet, the account number on your card is turned into a digital token. This token is not comprised of the same numbers that are on your card, making the transaction safe in terms of what is being transferred and shared from bank to bank. On the retailer’s end, it makes it very difficult to obtain any personal banking information from patrons and it makes it extremely difficult for hackers to steal any information at all.
If you’re still concerned about security, the chip can still be dipped. That’s the nice part about it — it works two ways. When you dip, the transaction happens internally. When you tap, the transaction happens through an antenna.
Because banks are still releasing cards with chip readers, the tap and go method is still quite new in terms of completing transactions. Not all shops have the hardware to accept such payment, so it all depends on where you are.
Newer payment terminals can accept magnetic stripes, chip readers and tap and go payments. You might have even seen a sign at a store that says something such as ‘Apple Pay only.”
While we are still not in an era of contactless payments only, it seems to be the method of the future. Not including the US, Visa has stated that 48 percent of its in-person transactions are through contactless payments.
Because it’s a newer form of payment, and not every retailer has the hardware to accept such payments, you might wonder about places — such as the gas station — besides retailers. Kiosks and unattended payment terminals such as the ones at gas stations might take a bit longer to have Tap and Go technology added. You may start seeing vending machines and fast food restaurant kiosks get the technology since those are typically modeled after fast, effortless payments.
According to McKinsey, the in-person digital wallet is projected to grow at a 45% compound annual growth rate, and “tap-and-pay” will be a growth driver. Why? Technology is the way of the future, and younger generations want to spend less time in checkout lines and less time talking with retailers. They want to make their purchases and move on to the next part of their day.
EMV credit cards with chip readers are still being released, so it’s unlikely that strictly digital wallet payments will be taking over any time soon. For now, it’s just an extra option for people who prefer a tap to a dip.
Since there are so many payment methods nowadays, it’s important to know what you can use and where you can use it. Just because the switch to contactless payments isn’t going to happen overnight doesn’t mean it won’t happen in the near future.
The key to keeping your banking information safe is education, and it’s important to stay on top of how you can conduct payments so you aren’t blindsided when a store clerk asks you to tap instead of dip or swipe. Furthermore, if you’re a business owner, you need to be aware of all the ways your customers are going to want to pay. If younger generations frequent your shop, chances are high they’re going to want a contactless option for its ease of use and security.
Whether you’re a customer or business owner, it’s also good to have a backup payment form in the back of your mind in case you find yourself somewhere that doesn’t accept the way you want to pay or so that your customers have options. Making yourself more familiar with different ways of paying will also be beneficial in easing your mind when it comes to security.
If you have owned a business for quite some time, it might be hard to see why you should invest in new hardware since your customers are already accustomed to the way you accept payments. If you want to start attracting more customers, as in the younger generation that is more likely to have digital wallets downloaded on their phones, it’s best to make the investment. It’ll also mean your regular customers will get a greater variety of payment types, should they prefer frictionless payments over cash.
If you’re a new business owner, your best bet might be to make the investment in contactless payment terminals right away to avoid the stress of having to get all new hardware again in a couple of years.
IDTECH keeps up with all the latest technology to ensure that your business is equipped with exactly what it needs to make your customer service that much more effortless. If you have questions about terminal options or what types of tap and go technology we offer, reach out!