The new wave of contactless payments accelerates profits

Contactless payments create a whole new field of payment options for merchants. Contactless payments are quick, simple, and pave the way to higher profits. A smart computer chip, with data and an antenna, is embedded in a credit card, debit card, or key fob. When the card or key fob is touched on a radio frequency reader, the reader sends a radio signal that activates the card, the information on the card is read, and the payment is processed without signature for purchases under $ 25.00 with no chargebacks to the trader.

“Merchants don’t need to worry about compatibility with their current systems or security,” said Mohamed Khan, president and founder of ViVOtech, developer of contactless software, transaction management systems and readers at ViVOtech, Santa Clara, California.

“We have been working closely with processors, card issuers and terminal providers to create an open system using the IS0 14443 standard. It uses secure encryption technology. The contactless card does not leave the hands of customers, therefore, it’s more secure and doesn’t scan data, “said Kahn, who sees contactless technology as a great opportunity for merchants to increase revenue. He views contactless payments as a replacement for cash because they are faster, more convenient, and cost less because they are reduced less and less labor is required.

There are two types of contactless readers available: peripheral contactless (PCR) readers that connect to existing POS terminals, and integrated contactless (ICR) readers that replace traditional readers and offer contactless and magnetic stripe reading capabilities. Merchants can buy any type of reader. PCRs usually cost around $ 150. Some commercial service providers like Acies, however, offer competitive plans and free readers with terminals.

David Robertson, editor of The Nilson Report (Carpinteria, Calif.) Estimates that there are 12 million contactless cards currently in circulation in the U.S. He predicts that the first contactless hits will be at brand name retailers and then merchants in the areas where the cards are located. Deployed will do the same when your customers request to use their contactless cards.

Customers apply without contact in the New York metropolitan area, where many cards have been “dropped”, says CEO and president of Oleg Frier, Acies, Inc, a nationwide provider of financial services and payment processing based in New York City. Other areas where there are a large number of contactless readers and cards include Atlanta, Philadelphia, Denver, Dallas and Orlando, Khan says.

Studies show the speed and added value of contactless payments because usually when someone doesn’t pay in cash, the amount of the transaction goes up. Visa tests showed that its contactless card transactions were 25% faster than cash. MasterCard PayPass tests showed an increase in transaction amounts and 12-18 second reductions in payment times for drive-through transactions. Aite Group reports that CVS, the pharmacy chain, has found that the average contactless transaction takes 12.5 seconds, compared to 26.7 seconds for magnetic stripe card payments and 33.7 seconds for a cash transaction.

Merchants who have little time to serve customers, such as fast food restaurants, coffee shops, movie theaters, pharmacies, convenience stores, and drive-thrus can greatly benefit from contactless payment methods. McDonald’s, AMC Theaters, CVS, Meijer, Duane Reade, Regal Entertainment, Ritz Camera, Arby’s, Cold Stone Creamery, Eckerd, Carl’s Jr., Good Times Burger, KFC, RaceTrac, Subway, Sonic (Drive-In Restaurants) and Walgreens have Contactless readers installed. Convenience stores are gearing up to accept contactless payments. Contactless readers are being installed in 5,300 7-Eleven stores and 350 Sheetz stores. WaWa Markets are installing more than 2,000 readers in their 540 co-branded stores with a credit card and loyalty program.

Card associations are also excited about contactless payments.

“It takes a people to launch a new technology, at Visa, we have an absolute commitment to ensure the success of contactless payments,” said Elvira Swanson, a Visa spokesperson. Visa, with four million Visa Contactless cards in circulation, offers collateral materials, online demos and merchant support teams to help educate merchants.

“This is real. Contactless is beyond the ‘chicken and egg’ stage now, when you look at how many financial institutions have made the decision to offer contactless and the number of domestic merchants who accept it,” said TJ Sharkey, Vice President, Business Development, US Acceptance, MasterCard International. MasterCard supports contactless technology in many ways. Merchants that accept contactless payments are listed on the MasterCard website, where there are demos on how their Tap N Go cards work, PayPass. TV commercials illustrating their PayPass cards are airing nationally.

Banks that issue contactless cards include Citibank, MBNA, HSBC (debit cards), JP Morgan Chase, Key Bank (debit cards), and Citizen.

There have been several non-contact pilot programs in sports arenas, including San Francisco, Seattle, Baltimore, and Philadelphia. Recently, another contactless form factor has been added to the mix, with the trial of NFC (Near Field Communications) contactless payments from cell phones at the Philips Arena in Atlanta. Season ticket holders with Chase-issued Visa credit accounts and Cingular Wireless accounts can make contactless payments by simply holding their Nokia mobile phones equipped with Philips NFC semiconductor chips and ViVOtech software near one of the 150 terminals. NFC is compatible with ISO 1443 readers and has other features such as the ability to transmit a coupon to a reader.

“Contactless payments are the wave of the future and will change the way the world pays for purchases,” Khan said enthusiastically.

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