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Tap to pay: Why it is essential for modern day businesses

Last updated on May 27, 2024

Tap to pay is a contactless method of payment that was originally rolled out for customers with debit and credit cards. Now, customers can tap to pay using their debit, or credit card, smartphone, or wearable device. In this article, we will look at the tap to pay phenomenon and explain everything you need to know

What is tap to pay? 

Tap to pay (also called contactless payment) is a method that customers pay by tapping their debit, or credit card, smartphone, or wearable device onto the payment terminal. Also known as contactless, tap to phone or tap on phone, tap to pay is a popular payment method because it is so easy to do. In fact, 87% of people in the UK make a contactless payment at least once a month. 

Before contactless, customers had to swipe or insert their card into a payment terminal. The beauty of tap to pay is that it can be done using a wide variety of payment methods, such as a smartphone or a watch, and not just a debit or credit card. It is this convenience that is behind the rising trend in popularity, with retailers welcoming contactless payments without imposing a minimum payment amount.

How does tap to pay work? 

Tap to pay has a brand logo design that consists of a symbol with four curved lines, portraying a radio signal. Any payment terminal displaying this logo will be able to support contactless payments. 

Tap to pay is made possible through technology known as “near-field communication” (NFC). NFC works using a short-range radio frequency that enables a contactless card or device to communicate with a payment terminal, securely and wirelessly. 

Technically, this method should work without the contactless card or device touching the payment terminal, but customers are encouraged to make contact to maximise the chances of this technology working.

  1. Tap to pay works when an NFC-enabled card, smartphone, or wearable device is placed within approximately two inches of an NFC payment terminal. 
  2. The customer’s NFC-enabled payment device sends a single-use token to the payment terminal. It is unique to that specific purchase, and includes transaction details such as your card number and expiration date. 
  3. The payment terminal then sends this encrypted transaction information to the merchant’s and customer’s bank to verify the details and either approve or refuse the transaction. 
  4. On approval, the payment terminal completes the transaction, sending the customer’s card or device a signal to confirm the payment.

To avoid interference from other wireless devices, NFC uses a specific RFID frequency of 13.56 MHz. This also means that the communication between the payment terminal and contactless payment device must take place over a small distance. This also reduces the likelihood of accidental taps, whilst providing a convenient layer of payment security.

Is tap to pay safe?

Yes. Tap to pay has some convenient security layers incorporated into the process including tokenization, encryption, and two-factor authentication: 

- Tokenization: When tap to pay takes place, an algorithm generates a unique random value, known as a token. The beauty of this token is that it replaces a customer’s primary account number (PAN). A different token is generated every time the contactless payment terminal is used. 
- Encryption: The encryption changes every time a tap to pay payment is made. This makes it even trickier for a hacker to take advantage because even if they can decipher a code, it’ll be too late as the code is only valid for one transaction.
- Two-factor authentication: Apple Pay, Google Pay and many other mobile payment methods ask users to set up two-factor authentication (2FA). 2FA verifies each transaction with a Face ID, PIN, or fingerprint. This means that even if your phone is lost or stolen, it cannot be used for payment.

Top 6 benefits of tap to pay 

It’s not just shoppers who favour tap to pay. Retailers love it, too. Here are a few reasons why it is so popular:

1. Improves payment security – For all the reasons above (tokenization, encryption and 2FA), tap to pay has high levels of payment security incorporated into the process. 

2. Creates a faster check-out experience - Self-checkout is particularly popular with grocery retailers. Operators have streamlined their self-checkout software and processes to make it increasingly easier to use. And if you’ve been to a self-checkout with a five year old, you’ll know how easy it is – it’s literally child’s play! Tap to pay plays a role in this because the last thing that a shopper wants to do after scanning their shopping is to have an elongated payment experience. Contactless provides a frictionless payment process to make customers smile. 

3. Motivates customers to use self-checkout facilities – Thanks to the role that contactless has played, the speed of self-checkout has encouraged the use of self-checkout facilities. 

4. Encourages additional purchases – Imagine a shop customer who pays for their products and then realises they had forgotten something. We’ve all done it. Instead of the traditional groan, the customer picks up the product they want to buy and taps their card, watch or phone onto the payment terminal. Before they can think about the seconds that they have lost, it’s done. This rapid shopping experience stops customers from being put off from buying a second tranche of products immediately after the first. 

5. Boosts customer satisfaction and loyalty – Businesses appreciate tap to pay for the same reasons customers do. It offers a safe, speedy and convenient payment experience. And as we know, a great customer experience increases the likelihood of customers returning. 

6. Improved hygiene – Staff and customers appreciate the no touch nature of tap to pay. 
Little to no extra cost – Most payment processors charge no more for tap to pay than they do for the older methods of accepting debit and credit cards.

Types of contactless payments

Contactless was originally rolled out for use by debit and credit cards. Now, there are various ways to tap and pay, and it’s likely that these will increase and perhaps evolve over time. Let’s look at them:

- Debit and credit cards: We’ll start with the most obvious first. Providing that the debit or credit card contains a chip and the radio wave symbol, the card is NFC-enabled and all set up for a tap and go experience. After all, NFC cards are the original contactless tap to pay method and remain the most popular.

- Mobile payment apps: According to the World Economic Forum, there are now more mobile phones than people worldwide. Setting up your mobile phone for mobile payments is easy to do. And using it for contactless is pain free too. Customers can hover their NFC-enabled mobile phone over a payment terminal to complete the transaction.

- Wearables: In this report, the global wearable technology market was estimated to be worth $116.2 billion (USD) in 2021. And it is expected to more than double by 2026 to an estimated value of 265.4 billion (USD).  Where has this been sourced from.  All wearable smartwatches, bracelets, rings and key fobs are now integrated with NFC technology, meaning customers can tap their device onto the payment terminal to complete a purchase. Eliminating the need for a phone or wallet, it is easy to see why this payment method is likely to rocket when it comes to tap and go payments. 

How to accept tap to pay from customers

If you are a retailer, you will be pleased to know that there’s more than one way to accept tap to pay. These include: 

- Contactless card readers - Chip and PIN card readers have evolved to accept contactless payments. You may be surprised to read that the first contactless credit card appeared back in 2007. If your card reader has the contactless symbol (with four curved lines), you can use it to accept tap to pay payments. If you operate a new business or simply haven’t accepted debit or credit cards before, you must set up a merchant account with a merchant service provider.

- Tap to pay on iPhone - You can securely accept contactless payments on your iPhone by adding a mobile payment app to it. No additional point-of-sale hardware is required for this to work. You don’t need to purchase any extra POS hardware for this. You need to install the app and start selling products wherever you use your iPhone to accept various payment methods.

- Tap to pay on Android – This technology is also available for Android phones and works similarly, but for Android devices, it's known as Tap to Phone (TTP). Customers must tap their smartphone or wearable device (with a mobile wallet installed) over your Android phone to complete the payment. 

- Tap to pay on a tablet - You can accept contactless payments from your tablet if your tablet has NFC functionality and the right payment app is installed. Tablets are especially popular with brick-and-mortar stores and restaurants because they can be used as a sales tool while collecting payment at the same time. 

FAQs

How do I know if a debit or credit card can tap to pay?

Cards designed to facilitate tap to pay all feature a symbol with four curved lines. This logo indicates that the card has NFC and is ready for contactless payments.

How can I tell if my payment terminal can handle tap to pay cards?

Look for the tap to pay brand logo with four curved lines. This design portrays an NFC radio signal. Any payment terminal displaying this logo will be able to support contactless payments.

Will my transaction fees increase if I accept tap to pay payments? 

That depends on your payment processor, although most providers charge no more for tap to pay than for the older methods of accepting debit and credit cards.

Can customers use tap to pay technology for online transactions?

No. Tap to pay has been designed for in-person transactions only. That said, digital wallets such as Apple Pay and Google Pay, can be used for online transactions.

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