Everything you need to know about contactless payments
The rapid demand increase for digital payments in Europe is mainly due to consumers' changing behaviors and stand for digital payments, the drastic increase in cross-border transactions, and the launch of the EU Digital Identity Wallet.
In addition, the 2020s did unfold under the sign of drastic changes for retail because of the pandemic: new consumer habits, new distribution and execution models and so on. Therefore, the current situation is building new European payment standards.
To adapt, retailers will have no choice but to move from a product-centric and price-centric marketing vision to a customer-centric one, equipping themselves with more technology to better predict these upheavals, and meet demand better.
What are contactless payments? How to accept them in your store? How can you succeed in the payment digital transformation? What are the trends to follow in order not to fall behind? And what are the mistakes to avoid?
If you’re curious about going contactless but don’t know where to begin, we’ve put together this guide to help you get started.
What are contactless payments?
Contactless payment is a payment way that allows customers to pay without using cash or inserting/swiping a card. All you have to do is tap your contactless card or mobile phone near a card reader/POS terminal in the checkout process. The machine will automatically process the payment and the purchase will be complete in a few seconds.
Cash vs contactless payments in numbers (European market):
Contactless payments appeared for the first time in 2012.
In 2016, more than €2 billion was spent in France via contactless payment.
In 2020, the Netherlands confirmed that the number of contactless payments within the country has doubled in 10 years.
Now in the Netherlands, people pay 4 times more with their card or mobile phone than in cash.
In Norway, 100% of citizens have a bank account and only 3% of transactions are made with cash.
Mastercard saw a 133% increase in contactless transactions between 2019 and 2021.
Visa believes that more than half of consumers are expected to shift to cashless payments within the next 10 years.
Around 8 from 10 card transactions in Europe are contactless now, a figure that’s risen by more than 25% since 2 years ago.
PCM's data reveals that the number of debit cards in Germany grew to 121 million by the end of 2021, with the number of debit card payments rising by 25.4% to €296.3 billion.
Types of contactless payments:
Contactless cards:
Debit and credit cards are considered to be the most used contactless payment type in the European continent. They are also called the tap to pay cards. The majority of merchants have a contactless POS machine capable of reading the card allowing customers to pay without having to insert the card and type the PIN code.
Accept contcatless cards in your store with Silkpay.
Mobile payment and e-wallets:
Mobile apps and e-wallets are the second most used contactless payment methods. The user needs to install applications, link his bank account or card with it and pay using his mobile phone only.
Some of the most popular e-wallets in the world are Google Pay, Apple Pay, Samsung Pay, Alipay, WeChat Pay. Google Pay is currently used by more than 150 million users in 45 markets. Alipay is used by 1.3 billion users.
Using mobile payment apps provide the user with extra security which explains the warm welcome they have received from users all over the world. All transactions require a fingerprint, face identification or code authorization. Plus, these applications add another layer of security as all transactions are encrypted. They are like a wall between the customer’s bank account or card data and the merchant.
What other advantages can contactless payments offer other than security?
Very quick and effortless:
Contactless payments take 30 to 50% less time than standard card payments. And compared to cash, contactless takes 60% less time in the checkout process. In the case of contactless cards, customers could even hover their wallet over the machine without having to take out their cards.
In 2014, Apple, for example, introduced its e-wallet Apple Pay in order to allow its users to pay via mobile phone even though they are not carrying their cards with them.
Increased revenue for merchants:
Offering contactless payment options will only increase the customer’s satisfaction and promote your store. Contactless payments are not an added value service anymore, on the contrary, they are becoming the norm of payments in Europe.
How to accept contactless payments?
POS terminal :
The POS is the machine that allows merchants to collect card transactions. Through a Silkpay POS terminal, merchants can accept all debit or credit cards (Visa, Mastercard, UnionPay, American express etc.) and contactless payment methods such as Google Pay or Apple Pay.
The customer can then hover his card over the POS to pay contactless.
By using Silkpay's POS, the processing of refunds is also made easier. It also allows you to track returns, refunds, and retrocessions.
PaybyLink:
If you have no technical knowledge, the payment method "PaybyLink" is the easiest to integrate for contactless payments. The merchant creates a payment link through his backoffice or his Silkpay app, and sends it to the customer via any channel (social media, sms, email ...). The customer chooses the payment method of his choice and pays for his purchases securely.
PaybyLink makes it extremely convenient to receive payments. By sending a payment request link, your customer is more likely to see it right away. Plus, it is a double advantage if they store their payment or banking information on their phone, they can pay you in just a few clicks.
API:
Through API integration, the entire payment process is integrated into your Website. The buyer does not need to leave the current page to verify the transaction on an external site (his bank’s). Your Website takes charge of verifying the buyer’s data compliance and validates the transaction.
Silkpay will provide you with a full documentation and support you through the whole process of an API integration.
What are the most popular payment methods for contactless payments?
Based on our data, the top 3 payment methods our merchants always ask to integrate in their store are:
UnionPay: The largest card network in the world - Card and QR code based payment method.
Alipay: The most used e-wallet in China with 1.3 billion users - QR code based payment method.
WeChat Pay: The second most used e-wallet in China with almost 1 billion users - QR code based payment method.
What are the customers’ thoughts on contactless payments?
The customer behavior and intentions has been subject to studies by thousands of researchers over the last years, because customers are the ones shaping the retail transformation.
The pandemic’s impact on consumers’ payment habits:
83%
Consumers worried about touching a credit card payment reader
54%
Consumers would switch to a new store that installed contactless payment
70%
Consumers who are new to contactless payments plan to continue after Covid-19
According to data released by the European Central Bank (ECB), consumers in the European zone are gradually shifting to contactless payments, either via mobile or cards. According to the chart above, the most mentioned reason for this transition to digital payments was the fact that electronic payments have been made more convenient (45% of respondents chose convenience as their reason).
On one side, In 2021, contactless payment use via mobile reached a penetration rate of 52 % in Denmark, 31% in Portugal, 29% in Poland, 27% in Belgium.
On the other side, unlike other European countries, the French population doesn’t show an important interest in mobile payment, however, the country registered a boom in cards contactless payments in 2020. Contactless payments via card in France have increased by 38% in volume and 89% in value reaching respectively 5 billion transactions and 80 billion euros.
Germany’s case:
Germany is known to be one of the countries where customers rely on cash the most. However, despite citizens being reluctant about contactless payments, German consumers started showing a remarkable interest in debit cards and a significant decline in cash use has been registered.
According to Euromonitor, card payment transactions in Germany are expected to rise by 28% from 2019 to 2025. This increase is also due to doubling the transaction limit on card contactless payments to 50 euros in Germany like many other European countries (France for example).
Steps to follow to accept contactless payments?
The ultimate rule: The customer experience is a priority
If you look closely at the customer behavior studies in recent years. There is no doubt that customers favor the experience over many other factors.
According to a study, more than half of consumers agree that they’re more likely to buy from merchants who use technology to improve the shopping experience. And, 47% of consumers would shop with merchants that use technology to reduce person-to-person contact.
In order to succeed the transition to contactless payments in your business, following the steps below in order is necessary:
1- Check your existing material:
Generally, the POS terminals are already capable of accepting contactless payments. Check if there is a symbol with a few lines that looks like a wifi symbol. If yes, then you can start accepting contactless payment methods. Just make sure to activate the contactless payment option.
Need to install new equipment and start accepting contactless payment methods? Talk with a Silkpay specialist for help.
2- Install the payment methods of your choice:
If you are accepting contactless payments with Silkpay, you can choose from our 30 payment methods including: Visa, Mastercard, UnionPay, Alipay, WeChat Pay, American Express etc.
3- Training your employees is a must:
For a smooth frictionless checkout process, you need to train your employees to learn how to use the new equipment. Customers will surely ask questions such as where to tap their card, your employees should be ready to guide clients for a more pleasant checkout experience.
After opening an account with Silkpay, our employees will take charge of training your employees face-to-face at your store if you are based in the Paris region.
4- Promote it around your customers:
Once contactless payments installed, you can spread the word that you accept contactless payments by:
Sending emails to your existing customers
Storefront symbols and stickers
Checkout counter stickers
Advertisements
Once your clients are aware that you accept contactless payments, it will only bring more clients and more revenue to your store.
Bottom line:
Contactless payments such as tap-to-pay cards or e-wallets have seen a major increase in popularity in recent years, especially at the start of the pandemic in 2020. While these payment methods offer the best security features for its users by requiring biometric verification or other, contactless payments are now widely used. Thus, accepting them in your store is advised to keep up with the payment trends and make more profit.
The transition to contactless payments is in fact easier than you think. You may find out that you already have the capability to accept contactless payments when you check your equipment. You just need to integrate the right payment methods in your store (online or offline).
Adding a contactless payment solution will let your store offer balanced options to your customers as well as an additional fast, safe, and secure way to pay. Having an online payment option like PaybyLink has also been proven to increase sales and improve cash flow.
Learn more about how you can quickly start generating more sales through payments with Silkpay. We will be happy to answer any questions you have and help you leverage the best contactless payment solutions for your business needs.
About the author: Silkpay
Founded in 2016, Silkpay is a fintech company and provider of customized payment solutions in Europe, headquartered in Paris (France). Silkpay offers secure omnichannel payment solutions that enable physical stores and e-commerce stores in Europe and the United States to use the world's most popular payment methods: Alipay, WeChat Pay, UnionPay, Visa, Mastercard, CB, PayPal, Google Pay, as well as bank transfers and direct debits.
Silkpay is a winner of the LVMH Innovation Award and was present at the LVMH stand at Vivatech in 2019. The company was also selected as a finalist for the "Money 2020" Best Startup and in the "MPE Berlin” Startup Awards. Silkpay also won the "Best Fintech" awards from Capgemini and BPCE.
Silkpay helps merchants deliver the smoothest payment experience to their customers. We are a talented and international team driven by a single goal: to improve the customer experience and make payments simple and secure.
contact@silkpay.fr
+33 7 50 27 78 12
Sources:
Rapport 2020 de l’Observatoire de la sécurité des moyens de paiement (OSMP)
https://investor.mastercard.com/financials-and-sec-filings/quarterly-results/default.aspx
https://usa.visa.com/about-visa/newsroom/press-releases.releaseId.18711.html