What is Contactless Payment?

What is contactless payment?

Contactless payment is a payment processed without any direct, physical contact between a staff member and your customer. 

Contactless payments can be processed in several ways: by tapping, dipping, or swiping a credit or debit card; by scanning mobile payments and virtual wallets; or by scanning QR codes and completing payment on a mobile internet browser page (more on this below). Contactless payments are sometimes called touchless payments, scan-to-pay, tap-to-pay, or tap-and-go.

The demand for contactless payment technology has exponentially increased in the past year. COVID-19 has accelerated its adoption: at a time when safety and social distancing are paramount, eliminating physical contact between guests and staff is a key way to make everyone involved feel safer.

Beyond these COVID-era benefits, contactless payment offers convenience, ease, and efficiency for both restaurant staff and customers. Contactless payments also offer extra security, quicker transactions, and customer loyalty incentives. 

But how exactly do contactless payments work? And are they right for you and your restaurant? Let’s dive in.

How does a contactless payment work?

Contactless payment can be processed in several ways: via debit and credit cards, QR codes, and virtual wallets on mobile devices, thanks largely to a payment technology advancements called NFC and RFID. 

What is NFC? 

Touchless Near Field Communication (NFC) is the critical technology that enables mobile payments for restaurants. NFC connects the mobile device to the restaurant’s point of sale (POS) system and allows the two devices to communicate via encrypted signal, and process the payments almost instantly. 

What is RFID?

Contactless payment cards work slightly differently. Touchless payment cards use radio-frequency identification (RFID) technology. Essentially, the card emits radio waves to communicate with the POS terminal to process payment. 

What is a contactless payment card?

Most major credit card companies create credit and debit cards with contactless payment functionality, including Chase, Citi, American Express, Wells Fargo, and more.

The contactless credit cards have a small chip embedded in them that creates the radio waves (RFID), allowing them to communicate with the payment processing system and complete the restaurant transaction.

Contactless payment options

There are several options for contactless payment. Here are the three most popular categories. 

Restaurant QR Codes

QR codes are the simplest form of contactless ordering and payment. QR codes are also sometimes called scan-to-pay. 

Here’s how it works: Restaurants place cards or tents on tables with a QR code on them. Guests scan the code with their phone cameras, which takes them to your online ordering menu, and lets your servers know where the customer is seated within the restaurant. From there, guests decide on their order, place it as if they’re ordering takeout, and pay — all from the convenience and safety of their own phone. QR codes used this way essentially allow guests to order online, but as they’re seated and served at the restaurant. 

QR codes can also be used to just pay the bill, where the server drops off a bill that has a QR code at the bottom, and guests can then scan and pay their tab from their phone. 

Contactless payment companies make your operation more efficient and effective. Toast’s Order & Pay technology uses QR codes and can help you reduce your labor costs, improve table turn times, and increase sales. 

Tap, Dip, and Swipe

In this scenario, guests can use their contactless-enabled credit or debit cards to pay at the table or restaurant by tapping, dipping, or swiping their card against the card reader. 

Contactless cards optimize payments by creating faster checkout times and reducing overall contact. Because this technology generally doesn’t require a PIN or signature, it eliminates any need to pass cards back and forth or touch a keypad to input a pin. It is also more secure than traditional credit cards. 

Capital One explains it this way: 

“Contactless transactions are like chip card transactions. Each contactless transaction creates a unique, one-time code or password. This reduces security risks since the code can’t be used again—and it can be read-only by the card-processing network. This is more secure than a magnetic stripe because data from “magstripes” can be easily captured and duplicated.”

Phone Pay and Virtual Wallet

Virtual wallets, payment apps, and mobile payments work similarly to contactless cards. Mobile wallets offer an extra layer of convenience, as they don’t require the user to carry a physical card or wallet. 

Similar to cards, guests are able to pull up their card on their mobile phone’s virtual wallet or touchless payment app, tap their phones to the card reader, and process their payment. 

Mobile wallets like Apple Pay, Venmo, and CashApp are increasingly popular and have normalized the use of mobile wallets between friends. Making this option available in stores and restaurants makes sense as the next step in contactless payment.

Where can I use contactless payments? 

Contactless is becoming more commonplace in restaurants and in recent years, and the COVID-19 pandemic has accelerated its adoption (along with contactless delivery). 

Contactless payment can be used anywhere the technology is available, which by now is in most of the United States. 

For Visa alone, “Tap-to-pay transactions in everyday segments in the U.S. including grocery and pharmacy has grown more than 100% year over year.” Their data shows that “31 million Americans tapped a Visa contactless card or digital wallet in March 2020, up from 25 million in November, with overall contactless usage in the U.S. growing 150% since March 2019.” 

What are the benefits of contactless payments?

The benefits of contactless payments are

• Safer transactions
• Faster transactions
• More convenient transactions with options for everyone

Contactless payment methods make sense for the future of payment processing – as technology evolves to meet the need of safer transactions, and as the public gets used to this level of speed and convenience.

With faster checkouts and more secure payments, contactless payments are here to stay.