New Wave of Contactless Payments
Contactless payments create a whole new field of payment options for merchants. Contactless payments are quick, simple and pave the way for greater profits. A smart computer chip, with data and an antenna is embedded into a credit card, debit card or fob. When the card or fob is tapped on a radio frequency reader, the reader sends out a radio signal that activates the card, the information on the card is read and the payment is processed without a signature for purchases less than $25.00 with no chargebacks to the merchant.
“Merchants don’t need to worry about compatibility with their present systems or security” said, Mohamed Khan, President and Founder of ViVOtech, Santa Clara, Calif.-based developer of contactless software, transaction management systems and readers.
“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 doesn’t leave the customers’ hands therefore it is more secure and there’s no skimming of data,” assured Kahn who sees contactless as a great opportunity for merchants to increase revenue. He envisions contactless payments as a replacement for cash because they are faster, more convenient and cost less due to less shrinkage and less labor involved.
There are two types of contactless readers available: Peripheral Contactless Readers (PCRs) that plug in to existing POS terminals, and Integrated Contactless Readers (ICRs) that replace traditional readers and offer both magnetic-stripe- and contactless-reading capabilities. Merchants can purchase either type of reader. The PCRs usually cost around $150. Some merchant service providers such as Acies, however, are offering deals competitive plans and free readers with terminals.
David Robertson, Publisher of The Nilson Report (Carpinteria, Calif.) estimates that there are 12 million contactless cards currently in circulation in the U.S. He predicts that first contactless successes will be at the brand name retailers and then merchants in the areas where cards are deployed will follow suit when their customers ask to use their contactless cards.