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What are contactless payments and how do they work?

Contactless payments can reduce person-to-person contact and keep commerce moving. How do they work? Our blog answers six fundamental questions.

Right now, businesses and consumers are looking for ways to reduce person-to-person contact while keeping commerce moving. One way of doing this is with contactless payments. But what exactly are contactless payments? And how do they work? Here are six questions (and answers) to help get you started.

1. How do contactless payments work?

Contactless payments use technology called near field communication (NFC), which establishes a connection between two NFC devices when in proximity of one other. Once the connection is established, payment information is transmitted via radio waves using radio frequency identification (RFID).

2. What does a merchant need to accept contactless payments?

Merchants simply need a point-of-sale (POS) payment terminal or card reader that’s equipped with NFC technology to accept contactless payments.

3. How do customers make contactless payments?

There are two primary ways for customers to make contactless payments. First is by using digital wallet apps such as Apple Pay or Google Pay via smartphones or wearable devices. Another popular option is contactless payment cards, which have a NFC chip and RFID antenna built in to the physical card.

4. Do the payment terminal and the device/card need to touch?

No. The beauty of NFC is that the two devices simply need to be within proximity of one another (usually several inches) to complete the transaction. Users initiate the payment with their smartphone, wearable device, or contactless card once they’re in proximity and the transaction is complete. No physical contact is required for this “tap-to-pay” user experience.

5. Are contactless payments safe?

Contactless payments are tokenized, meaning the payment information is replaced with random characters that can’t be decoded. If this information is ever stolen, it is useless to the recipient. Digital wallets also use biometric authentication, such as fingerprint identification or face recognition, for an extra layer of security when making contactless payments. Click here to read more about contactless payments security.

6. How do I know if my existing card readers can accept contactless payments?

Talk to your payment processor. They can tell you if your current hardware supports contactless payments or if you need new equipment to get started.

Need a contactless reader? Click here to get in touch.

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