‘Employee swindles Rs. 45 lakhs at the till in a supermarket’was the spine-chilling news headline that took retailers and restaurateurs by storm. Wait, do not panic! There’s a solution not to fall prey to payment frauds, and secure transactions – Adopt contactless payments. Read the article here.
As of Jan 2022, almost one in three transactions in the supermarket industry had been contactless. This implies adoption of contactless payments is growing amongst Indian consumers, especially in the retail and restaurant sectors. Services and payments in the retail and restaurant sectors are promptly completed, and they rarely turn to credit payments. So, the number of transactions that these sectors witness in a day is huge, increasing the odds of monetary fraud. This is equally applicable to retailers and consumers.
Why contactless payment?
Payment modes in today’s world are done in multiple ways – cash, credit cards, debit cards, net banking, mobile banking, UPI, wallets, etc. Most of the conventional payment methods require the payee’s and payer’s devices to come in contact with each other. For example, the dwindling method of card swipe brings the payer’s magnetic stripe card in contact with the payee’s POS machine, exposing it to the chances of cloning by card skimming. Card skimming is a usual thieving process where the POS machines are replaced with POS-like card skimmers. India witnesses around 1000 card skimming cases, a year, the major crime locations being ATMs, retail and restaurant outlets.
What is contactless payment?
The mode of payments where the transactions happen without the payer’s and payee’s devices coming in contact with each other is called contactless payments. For us Indians, there couldn’t be a better example than UPI. UPI offers a powerful set of contactless payment modes like – static and dynamic QR code scanning, payment via phone numbers, single-click payments with multifactor authentication, etc. So, contactless payments are those that are done without the banking devices of the business and the consumer coming into contact. Contactless payment is a convenient mode of payment, and we’ll look deeper into it soon! Habituated by the convenience of the contactless payment method of UPI, Indians have altered their shopping patterns toward payment flexibility. Put it to good use and raise your sales by supporting contactless payments at your store!
How does contactless payment work?
Technology is making it only better for us. We now have contactless payment setups from the vegetable vendor at the end of the street to the mall checkouts. This is uncertified evidence of the penetration of contactless payments into the Indian population. Let’s have a glimpse of the working of the common contactless payment modes.
- Contactless payments with NFC – Near Field Technology offers instant pairing, limited to a small range of frequencies over a small distance, making the payment secure, contactless and quick. All that happens is – the payer brings his payment device (phone/card) in proximity to the payee’s device and the payment can be completed with authentication.
- Contactless payments with UPI –
- Static QR code payments – The payer scans the payee’s static QR code, from the payment apps like (Google Pay, PhonePe, etc.) enters the payment amount and pays with authentication.
- Dynamic QR code payments – The payer scans the payee’s dynamic QR code, from the payment apps like (Google Pay, PhonePe, etc.) and the payment amount loads automatically and pays with authentication.
- In-app payments – The payer clicks on the payment options on the app or e-commerce platform and the amount autoloads on the payment app and is then paid with authentication.
- Requests on payment apps – The payee’s POS sends payment requests for the bill amount to the payer’s app. The payer can click on the request and pay with authentication.
- Contactless payments with Wallets – The payer adds money to the store-specific, payment app-specific wallets and shops from it. The POS provides the option to bill from the wallet amount and the customer is freed from having to enter the card details every time he shops.
Why should a business adopt contactless payment?
Going the digital way has only benefits. By not changing the POS to accept more secure payment methods, businesses, albeit small or big, are keeping themselves exposed to fraudulent scams and under-par customer experience. Here are 5 reasons why you should adopt contactless payments.
1. Secure mode of payment
- Authentication – Contactless payments allow single and multifactor authentication like fingerprints, and patterns, making it secure. These authentication methods are quicker and more secure as they do not expose your pin at the till.
- No rupturing and cloning concerns – As the payer and payee devices do not come into contact with each other, the chances for card skimming, magnetic strip rupturing and cloning are eliminated.
- Reduces disease transmission possibilities – Imbibing the practices of the post-covid era and embracing social distancing, contactless payment is the new normal.
- No more overnight waits to collect your payments – A day’s wait, commute to the bank, long queues, and planning your schedule to fit the bank’s schedule, are no more part of your business. Keep the working capital of your business high with prompt accessibility to your receivables.
- No more repeated data entry on payments – Customers wait to enter card details like CVV or pin on payment, increase the billing time and the queue length. Contactless payment simplifies and quickens the process with single-click payments with authentication.
- Instant updates and alerts – Contactless payment methods happen online and are supported with instant credit and debit alerts to the payee and payer, respectively. The retailer (payee) gets the credit notification and the consumer (payer) gets the debit notification, this wards confusion. Retailers can also send instant digital invoices from the POS to the consumer’s phone.
3. Eliminates supervision at the till
- No fear of theft – Cash theft is the common form of theft as the usability-immediacy is high. When it comes to contactless payment, mandatory authentication makes its theft meaningless. And as discussed earlier, card skimming is not a threat.
- All data will be digitally tallied – As all contactless payment transactions are digital, denomination tallying is automated. This eliminates the gap between the till closing time and the shop closing time, and also the need for a resource to tally the transactions with the inventory manually.
- No space for malpractices – The payables and receivables are tallied on the retailers’ and the consumers’ end, on digital invoices and the POS, respectively. So, contactless payments eliminate the malpractice probability of the first point of contact at the till.
4. No intermediaries
- No commission charges – The card swipe commission charge in India is 2% while for the contactless payment mode like QR code scanning, the commission significantly reduces to 0.30%. Save yourself or your customers from paying this unnecessary fee.
- No intermediary communications – Contactless payment enables real-time data update, with no intermediary contact points or communications with the bank. Thus, your money moves as the data moves online, securely.
- Payments within the apps, and websites – Contactless payment also supports convenient pre-paid delivery payments from apps and e-commerce platforms. Knock out the need to enter card details for payments.
5. Convenient and frictionless
- Different accounts option for consumers – Today, consumers use multiple accounts to make payments and different accounts for credit and debit cards. So, customers prefer shopping at stores that enable cardless transactions, i.e., contactless payments.
- No fear of running out of liquid cash – Do not make customers run to the ATM in the middle of their shopping to get the remaining cash. That would mark a bad customer experience. Let them pay conveniently and quickly with a single-click, contactless payment mode.
- Reduce human intervention – Contactless payments are completely frictionless, with technology doing the major part at the till. Also, as the data is updated in real-time, payment reconciliation is a rare case and if required, is easier.
How to make the first contactless payment?
There are multiple platforms that support contactless payments in India – E.g., Google Pay, PhonePe, Paytm, Bhim, etc. And each of these platforms has multiple contactless payment modes – card, wallet, UPI, etc. While card-based contactless payments (with NFC) need no prerequisites for the first transaction, card-less contactless payments need this simple step to be done – Login to the payment app (Google Pay, PhonePe, Paytm, Bhim, etc.) of your choice and enter your bank details and get them verified. Moreover, you can do your first contactless transaction with ease!
Working with a digitally native business solutions provider, I cannot stress enough how the ignorance of the importance of a POS keeps fraud prevalent in the industry. Post-pandemic contactless payments’ adoption has soared with consumers and retailers, owing to safety and keeping it digital. All you need is a POS that,
- Supports all payment modes
- Integrates with all payment devices (POS machines)
- Integrates with order and delivery platform payments
- Integrated for easier and effortless payment reconciliation
- Provides faster payment acknowledgement to customers
- Wipes out the scope for manual-entry-malpractices
- Requires no training to adapt to contactless payments
Check out Gofrugal POS which is helping businesses take customer experience on par and beyond that of their competitors in offering payment convenience. Protect yourself and your customers from frauds, transmissible illness, and unnecessary commission charges and offer a delightful customer experience.