Advantages and disadvantages of contactless payment systems
Today you can make a contactless payment by waving your card at payment terminals. No need to swipe your plastic card through a device input a PIN to allow the transaction or sign a receipt.
In this article, we will discuss the advantages and disadvantages of contactless payments.
Advantages of the contactless payment system for customers
• This is a convenient way of making payment as you need to pay using your smartphone or card. So, there’s no need to move around with a bulky wallet full of cash and cards. No more hassles of keying a PIN to approve transaction or signing receipts.
• This is a secure mode of payment that takes place between two devices. Customers don’t have to worry about fraudulent transactions. The contactless payment system does not need your card to come in contact with any device.
• NFC technology uses data encryption during the transmission of sensitive information. This reduces the threat of hackers stealing valuable information.
• The magnetic stripe is used only on cards, but contactless payment systems are available on different mediums. They are available on smartphones, key fobs, vehicles, or any mobile system.
• This is a cost and time-efficient method for the average customer. Tapping to pay is much more convenient than any other payment methods. Customers can use a contactless payment card without taking it out of the wallet. It enables lines to move in transit venues, thus saving much time for average people.
• No more typo errors when entering your PIN. The contactless payment system is accurate, secure and quick.
• Customers can keep track of loyalty points and rewards during purchases. Some banks may also offer cash back when you use the e-payment feature.
• Contactless payments provide a platform for future innovation. In the past six decades after the invention of mag-stripe, not much has changed in the way it functions. We have seen a huge innovation in the field of e-payments, and we hope this trend will continue.
• Mobile payment apps come with features you cannot imagine in a mag-stripe card. Some of these features are remote deactivation, virtual card provisioning, and user-configured pin-protection.
Disadvantages for customers
Few merchants use contactless payment systems.
Only customers who have e-payment apps on their mobile phone can use this technology. People can’t leave home with their NFC-capable phone as they may need a mag stripe to make payment.
If you lose your credit card, this can be a threat. The thief will not need to enter a PIN or sign a receipt to make purchases using your card until it is blocked. So, your account may be compromised.
With a contactless payment card, you cannot change the limit per transaction chosen by your bank.
Advantages for businesses
Speed is the biggest advantage of using contactless payment systems. It increases customer satisfaction as waiting time is reduced. Customers don’t have to search for cards or cash. As a business, you no longer have to deal with verifying the change given back to customers. This simplifies cash management.
With contactless payment methods, merchants can accept more payments during the peak sales times. Businesses can reduce delays without having to hire extra staff.
With contactless payments, businesses can optimize their loyalty programs and improve customer relationships. You can send digital copies of loyalty, reward, membership/ gift cards, special offers, and rebates to your mobile phone.