Consumers don’t like carrying cash but are wary of handing over a credit card because of the risk of credit card fraud. But what’s the alternative?
The next generation of electronic payment, contactless payments don’t require the customer to hand over their card. The whole transaction is completed electronically, and their card never leaves their hand. It’s faster, easier and much more secure.
But what about the merchant? Should cash-heavy merchants rush into setting up a contactless payments merchant account? The answer is a resounding yes! Contactless payments merchant accounts deliver even greater benefits to merchants than it does to consumers. Read on to find out how.
What is Contactless Payment?
Contactless payments merchant accounts are the third generation of electronic payments. (The first generation was the old plastic credit card, and the second was the magnetic stripe card.) Merchants with contactless payments merchant accounts enable customers to use their credit cards for purchases without ever handing their card over. Contactless payments merchant account transactions use one of the following methods:
o Contactless readers;
o Retailer cards/fobs;
o NFC (near field communication) enabled cell phone payment software; or
o Back end processing/over the air payment software.
Customers love it!
Research shows that 86% of consumers want to carry less cash, and most carry less than $20. (Survey was conducted in 2005 by lpsos and commissioned by MasterCard). They’re growing more comfortable using credit, but they’re still quite worried about security issues when handing over their card. In fact, 91% of likely users would feel more secure if they were allowed to hold their payment card through their entire payment process.
And then there’s ease of use, speed and convenience. Nationwide, almost 75% of respondents refuse to wait in line longer than five minutes for a purchase of less than $25, and more than 25% refuse to wait longer than just two minutes.
So how does contactless payment compare in terms of speed? Very well, in fact… It takes only 1/3 to ½ of the time of the average cash or traditional credit card transaction:
o CVS Pharmacy Average Cash Transaction = 33.7 seconds
o Average Card Transaction (w/o Signature = 26.7 seconds
o Average RF Transaction = 12.5 seconds
So contactless payments increase customers’ sense of security and decrease hated wait-times. It’s no surprise, then, that customers love it! best offshore merchant account
And the growth rate of contactless payments merchant accounts shows it. According to Brian Triplett, senior vice president for emerging product development-Visa USA, “The adoption rate is the fastest we’ve seen for any new technology. I do expect we will continue to see significant growth; whether it’s double or triple we’ll have to wait and see.”
What are the Benefits for Merchants?
The most obvious benefit for merchants in having contactless payments merchant accounts is that consumers love it, so they’ll use it more often and spend more.
But the benefits don’t end there. Contactless payments merchant accounts also:
o Leverage ‘Top of Wallet’ convenience – Like traditional credit cards (and unlike cash), the customer’s card is always in their wallet, which means they’re more likely to spend, simply because they can.
o Deliver increased merchant differentiation – Particularly in the early days of adoption, merchants with contactless payments merchant accounts will ‘stand out from the crowd.’ They’ll offer consumers a new and exciting way to pay for goods and services.
o Are cheaper to operate – Transactions clear as a card-present, magnetic stripe-read transaction, but card readers are a fraction of the cost of a new POS terminal.
o Increase efficiency – Businesses with contactless payments merchant accounts enjoy much more rapid check-out times during peak hours.
o Are easy to install and upgrade – The hardware for contactless payments merchant accounts is all plug-n-play.
o Increase customer loyalty – Studies show that customers return to the participating merchant’s location on an average of two times a month.
o Leverage a general consumer movement away from cash (20%) – Even customers who don’t specifically love contactless payment probably DO specifically dislike cash. By offering them an alternative, businesses increase the likelihood of a sale.