New Wave of Contactless Payments Speeds Up Profits
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New Wave of Contactless Payments Boosts Profits
A Comprehensive Guide to the Future of Cashless Transactions
Contactless payments are revolutionizing the way merchants handle transactions, offering a fast and efficient alternative to traditional payment methods. Embedded with a smart chip and antenna, contactless cards and fobs enable quick payments by simply tapping against a radio frequency reader. This method not only speeds up transactions but also enhances security by keeping the card in the customer's hand, reducing the risk of data skimming.
Compatibility and Security
Merchants can integrate contactless payments seamlessly into their current systems without concerns about compatibility or security, as highlighted by Mohamed Khan, President and Founder of ViVOtech. The use of the ISO 14443 standard ensures secure encryption, making these transactions both reliable and secure. Khan believes contactless payments are set to replace cash, offering a faster, more convenient, and cost-effective option with reduced shrinkage and labor.
Types of Contactless Readers
Merchants can choose between two main types of contactless readers:
- Peripheral Contactless Readers (PCRs): These plug into existing POS terminals and are typically available for around $150.
- Integrated Contactless Readers (ICRs): These replace traditional readers and support both magnetic stripe and contactless payments.
Some merchant service providers, such as Acies, offer competitive plans with free readers included.
Growing Adoption
David Robertson of The Nilson Report estimates that 12 million contactless cards are currently in use across the U.S., with initial success seen at major retailers. Areas like New York City, Atlanta, Philadelphia, Denver, and Dallas are witnessing growing demand, driven by consumers who prefer the convenience of contactless payments.
Speed and Efficiency
Studies reveal the efficiency of contactless payments, with transaction times significantly reduced. Visa trials found that contactless transactions were 25% faster than cash, while MasterCard PayPass trials noted increased transaction amounts and significantly quicker processing times in drive-thru scenarios. For instance, CVS reports that contactless transactions take just 12.5 seconds on average, compared to 26.7 seconds for traditional card payments and 33.7 seconds for cash transactions.
Ideal for High-Traffic Businesses
Industries with rapid customer turnover, such as fast food, coffee shops, and cinemas, greatly benefit from contactless payments. Major chains like McDonald's, AMC Theatres, and CVS have already embraced this technology. Convenience stores, including 7-Eleven and Sheetz, are also installing readers, with WaWa markets integrating over 2,000 readers across their stores.
Support from Card Associations
Card associations are strongly backing the move to contactless payments. Visa, with four million contactless cards in circulation, offers extensive support to merchants through educational materials and demos. Similarly, MasterCard is actively promoting contactless payments, listing participating merchants on its website and showcasing Tap N Go features in national commercials.
Broadening Horizons
Banks such as Citibank, MBNA, and JP Morgan Chase are issuing contactless cards, amplifying their presence. Additionally, innovative pilot programs are exploring contactless payments via mobile phones at sports stadiums, utilizing NFC (Near Field Communications) technology to offer seamless transactions and features like coupon transmission.
In conclusion, contactless payments are poised to transform the future of transactions, offering speed, security, and convenience. As Mohamed Khan aptly puts it, this is the wave of the future, set to change how the world handles purchases.
You can find the original non-AI version of this article here: New Wave of Contactless Payments Speeds Up Profits.
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