Mobile payments. ACH payments. Digital wallets. It seems like the list of payment options you can offer your customers are endless. And now, in modern-day commerce, there are two umbrellas that each of these payment types fall under: contactless payments and cashless payments.
While many think that those terms are interchangeable, they are not. Below we explain the differences between contactless and cashless payments, and why business owners should consider giving your customers the option to use both.
Contactless vs. cashless payments
Contactless payments and cashless payments are two terms that are sometimes used interchangeably but they refer to two different things.
- Cashless payments are any type of payment that is made without using cash. Bank transfers, credit card payments, mobile payments, and digital wallets are all cashless payments. The customer doesn’t need to have any cash on them to complete the purchase.
- Contactless payments are credit cards that use either using near-field communication (NFC) or radio frequency identification (RFID) technology. Instead of swiping or inserting your card, you simply wave the card near the reader to make your payment. No PIN or signature is required to complete the payment — you can simply wave your card and go.
As you can see, contactless payments are also cashless payments, but not all cashless payments will be contactless payments.
One of the most important reasons to adopt contactless payments is customer satisfaction.
The 3 biggest benefits of contactless payments
Contactless payments are just starting to gain traction in the U.S., but the technology isn’t new. Here are three beneficial reasons business owners should consider offering contactless payments:
- Security: With new technology, many customers worry about fraud and whether their financial information will be safe. Fortunately, there is a very low incidence of fraud when it comes to contactless payments. In fact, most fraud now happens online because in-person fraud has become increasingly difficult. Contactless payments are also PCI compliant, so customers and business owners alike can rest assured that personal information is safe. [Read: Credit Card Security: What Your Business Needs to Know]
- Speed of service: There are many advantages to using chip technology, but one clear disadvantage is that these transactions take longer. These days, customers expect fast and reliable service. If you own a brick-and-mortar business, your waiting times will decrease — improving business efficiency and possibly even limiting the number of employees you need available in your store.
- Customer satisfaction: One of the most important reasons to adopt contactless payments is customer satisfaction. By offering contactless payments, your business will be viewed as more forward-thinking. And your customers will be happier because they aren’t stuck waiting in long, slow-moving lines.
How to get started with contactless payments
Worldwide, countries like Australia, South Korea, and the U.K. have all adopted contactless payments on a broad scale. In the U.S., only about 3% of cards are contactless. The many benefits of contactless payments are, however, encouraging that statistic to grow.
If you’re considering contactless payments for your business, here are some questions to ask yourself:
- Financial ability. Given your industry and current sales traffic, does it make financial sense for you to offer contactless payments?
- Additional tools needed. What new equipment or hardware would you need to invest in?
- Employee training. How can you teach your employees to use this technology?
- Small steps. If you’re not ready to offer contactless payments, how can you give your customers more cashless payment options?
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.