Accepting contactless payment - a quick-start guide

Contactless payments have featured prominently in the news in the last week - but not necessarily for the right reasons.

A small number of consumers have reported that payments have been taken from their cards erroneously, because they have been close to a terminal when another payment was being made. The reports have called into question terminal manufacturers' assertion that it is impossible for the wrong card to be charged.

But, although contactless cards may still need some ironing out, they remain an important consideration for the UK's small businesses. The number of contactless cards has grown significantly in recent months and, if you are to hold onto this key revenue stream, you need to consider the ways in which you can accept contactless payment.

Can I take contactless payments?

Very probably. Contactless payments are now available to businesses of every size, thanks to the comparably low price of the terminals and of payment processing. Banks are pushing contactless cards as a key part of their offering, and it is presumed that they will, along with mobile phones, become the de facto payment method in the coming years.

The cost of upgrading to contactless terminals is, according to the UK Card Association, marginal when considered against the cost of upgrading a regular Chip and PIN handset. Contactless payment is therefore becoming an affordable option for businesses of every size.

1. What are the benefits?

There is a range of potential benefits associated with accepting contactless payments.

1. Revenue boost
When consumers pay with any type of card, whether contactless or not, they tend to spend more and conduct more transactions. But there is also evidence to suggest that holders of contactless cards tend to prefer buying from providers who accept contactless payment. With more than 30 million of these cards currently in use in the UK, contactless consumers are becoming a major force.
2. Shorter queues
Contactless payment takes significantly less time than a cash or Chip and PIN transaction - indeed, the UK Cards Association suggests that the total payment processing time could be under a second. There is no cash counting, no receipts, and no PIN entry, and these time savings are passed on to the customer in the form of shorter queues.
3. Less cash handling
There are several important advantages to reduced cash handling. In addition to the timesaving benefits explored above, fewer cash transactions mean fewer potential mistakes. It also means fewer resources have to be devoted to processes like cashing up, and ensures that audit trails are available for a greater proportion of your transactions.
4. Better customer service
Finally, accepting contactless payments means that you can provide better customer service. Consumers will soon expect to be able to use their contactless cards everywhere, and accepting this payment method will therefore be a necessity if you want to ensure that you are providing consumers with the best possible service.

How much does it cost?

It is important to remember, though, that accepting contactless payment is not without costs. These can be split into several categories.

1. Cost of equipment
There is a growing range of suppliers from which you could source contactless payment terminals. It is important to note that there are several different types of equipment. For example, you might have a reader that is separate from your Chip and PIN device, or you might choose an integrated system. Some banks also lease contactless equipment, which may represent a more cost efficient solution.
2. Cost of retraining
You will have to dedicate some time to training your staff in the proper use of contactless technology. Given the recent news stories, you should ensure that this training includes the procedures for dealing with erroneous payments.
3. Cost of marketing
You may wish to display some printed materials at tills or throughout the store advertising the fact that you now accept contactless payments. As discussed earlier, customers with contactless cards tend to prefer to spend money with retailers who accept contactless payment, so you should consider giving this information prominence.
4. Cost of transactions
Finally, you should remember that there will be a per-transaction cost levied by your payment processor. These charges can vary significantly between bank, and it is therefore important that you shop around to find the best deal - remembering that this might not be with your current business bank.