August 25, 2020
Understanding Contactless Payments
Contactless payments can provide speed and convenience when compared to the traditional card swipe or EMV chip, and they offer a safer payment alternative in our post-COVID world. There are several types of contactless technology, all of which have different hardware and software requirements. It’s important that merchants and software providers are familiar with the various contactless payment options to ensure that they implement the best solution for the business.
Near-Field Communication (NFC)
Typically, when people mention contactless payments, they are talking about NFC transactions, which allow the cardholder to “tap” their card or mobile phone on the payment terminal. When the card is close enough to the receiver, it transmits the payment information without needing to swipe it (hence contactless). There are two main ways to accept NFC payments:
- NFC cards are physical credit or debit cards that have an NFC transmitter inside of them. Customers simply tap the card on the receiver of the terminal, instead of swiping or inserting the card.
- Mobile wallets like Apple Pay, Google Pay, and Samsung Pay are services that allow the cardholder to connect the payment card to their smartphone, which becomes the actual payment method in place of the physical card.
Both of these are still considered card-present transactions and require the merchant and cardholder to have a few specific tools to complete the transaction in this way. The merchant needs to have a payment terminal that is equipped with an NFC sensor to read the card data and the cardholder needs to have a contactless card or mobile wallet that can act as an NFC transmitter.
QR Code Payments
Quick response (QR) code payments are a fast-growing alternative to NFC. For these types of transactions, the customer scans a unique QR code — which is basically a square barcode – with their mobile phone. When scanned, the QR code directs the customer to a URL, opening a web page or an application to complete payment. This has been adapted to payments in a few different ways:
- Shift4’s QR Pay solution allows customers to pay their bill by simply scanning a unique code with their smartphone. The code can be printed on a paper bill or receipt or can be displayed on the payment terminal’s screen. The customer then completes the transaction through the mobile web browser on their phone via Shift4’s secure mobile payment web page. They can use Apple Pay, Google Pay, or manually enter their card information.
- QR code payments can also be utilized as a mobile ordering function. With a QR code placed on the table or menu at a restaurant, guests can scan the code to open an ordering interface, where they can place their order and pay without having to wait for staff.
- WeChat Pay and Alipay are highly popular QR code-based payment methods in China. Their widespread use has led to rising demand for U.S. merchants to add support as an easy and comfortable payment option for customers traveling overseas. These solutions land between mobile wallets and QR code payments, as they require the consumer to be set up with a separate application, but still only need their phone to scan the code and complete the transaction.
QR code payments are popular for a few reasons. They don’t require the merchant or customer to have as much specialized hardware as they would with an NFC transaction. The cardholder just needs a smartphone, which typically has a QR scanner built right into the camera application. The merchant doesn’t have to have a particular POS terminal with a physical NFC sensor, just a device that is able to display the QR code, or the ability to print the QR code on a receipt. And since that functionality is typically software-based, it is possible to update some existing hardware to add that capability.
As part of our end-to-end solution, Shift4 Payments offers free contactless EMV terminals that support all of the above-mentioned types of NFC- and QR code-based transactions. These free terminals include our innovative SkyTab® mobile point-of-sale solution as well as a variety of third-party device options. We also offer SkyTab Online, which is fully integrated with the POS system for a seamless online ordering experience and is available completely free!
Visit shift4.com/contactless to learn more about our additional contactless options.