Check Out with a Wave

Joe Dysart

Contactless payment systems, which allow customers to simply wave a credit card or smartphone at the check-out counter to make a purchase, could be a boon for your garden center—as long as your customers are comfortable with the technology.

Credit card and high tech companies pushing contactless payment, which is driven by wireless applications like radio-frequency identification (RFID) or near field communication (NFC), say it speeds customers through check-out lines and encourages them to spend more.

But consumer surveys also reveal that not everyone is comfortable simply waving goodbye to their money.  “Despite contactless payments being heralded as a huge step in making it easier to pay for items, people are still reluctant to use their phones because of security concerns,” says Mike Sloman, vice-president of business development at Firstsource Solutions.

A technology that's been around for a number of years, contactless payments got a major boost last in 2014 from Apple, which introduced Apple Pay, a contactless payment system that works with Apple iPads, iPhones and other Apple iOS devices.

“When you’re using Apple Pay in a store, restaurant or other merchant, cashiers will no longer see your name, credit card number or security code, helping to reduce the potential for fraud,” says Eddy Cue, Apple’s senior vice president of Internet Software and Services.

Moreover, other major tech companies like Samsung and Google are also pushing contactless payment.  “Mobile payments is a big priority for Google,” says Pali Bhat, director of product management at Google.

While contactless payments have yet to claim a major foothold in the U.S., the technology is widely accepted in other select locations across the globe. 

In London, for example, acceptance of contactless payments is “virtually ubiquitous,” according to a March 2016 report by Strategy Analytics, a high tech business consultancy.

Why You Should Consider It
Probably one of the greatest benefits of contactless payments is shorter check-out lines. No longer forced to fumble with PIN input terminals, or figure out how the new chip card terminals work, customers using contactless payments can simply wave a card or device at checkout and leave.

Plus, alleviated from the psychological speed bumps of being forced to touch machines—or even worse, pay cash for something—customers using contactless credit cards, smartphones and similar devices tend to spend more, according to the technology’s proponents.

For customers, becoming contactless payment ready involves little more than whipping out a contactless credit card or downloading a contactless payment app offered by their favorite bank.

How You Can Accept It
For garden retailers, accepting payments requires either adding a contactless payment peripheral to their existing payment system or buying an entirely new payment system outright. Generally, peripherals run about $200 to $400 apiece, according to listings on Amazon.com.

And an entire new payment system can go for a lot more. Expect to pay $300 to $1,300 for each terminal you bring in—depending on the features you’re looking for—according to Phil Wimberly, vice president of integrated solutions sales for OpenEdge, a payments software provider.

Or course, once they have the hardware, garden centers will also need to work with their payment processor to ensure contactless payment is added to their contract.

One extremely inexpensive alternative is the Square Reader from Square (https://squareup.com/). It handles credit card swipes, chip card dips and contactless payments, and runs a garden retailer $49 for the reader and a 2.75% charge for each transaction.

Besides convenience, banks and tech companies like contactless payment because, like a chip card, it forgoes a credit card’s 16-digit number to authenticate a purchase. Instead, a payment terminal communicates wirelessly with a contactless payment card and generates a different authentication number for each purchase, making transactions much more difficult to counterfeit.

Other key benefits of contactless payments include:

• $25-and-under pass-through even quicker: Contactless transactions under $25 often don’t require a signature, speeding check-out times at your garden center even more.

• Same protections as most other credit: Credit card issuers generally offer the same merchant protections for contactless payment as they do for other types of credit payments.

• Fewer errors: Given that consumers are not required to type PINs or “guess” if a terminal uses swipe or chip card technology, contactless payment results in fewer errors.

• Myriad payment devices: In this age of the wearable computerized device, contactless payments can also be made using smart watches, wrist bands and even some specially designed gloves.

“More and more, consumers are relying on smart appliances and connected devices to make their lives easier,” says Jim McCarthy, executive vice president, innovation and strategic partnerships at Visa. “By adding payments to these devices, we are turning virtually any Internet connection into a commerce experience—making secure payments seamless, and ultimately more accessible, to merchants and consumers.”

Luke Fromowitz, co-founder and CTO, Chronos, a watchmaker, agrees: “Chronos is focused on bringing the very best of today’s technology to the items you already wear—creating seamless devices by distilling functionality and technology only to those that provide meaningful interactions.”

• Easy activation of payment devices: Customers looking to use a smartphone, tablet or similar device for contactless payments don’t need to contactless credit card to do so. Instead, they can simply feed their traditional credit card info into a downloaded app and their devices instantly become contactless payment ready.

Consumer Adoption
Despite all the benefits, though, contactless payments still need to hurdle the skeptics, who aren’t comfortable sending their money through thin air. A 2015 study released by market research firm YouGov, for example, found that 47% of respondents didn’t want to use their phone to make a payment. And 81% said they had security concerns with contactless payment.

Plus, nearly 30% of the 2,000 people surveyed also saw no benefit from contactless payments as compared to existing credit options. Women were especially concerned about security: 84% said they wouldn’t use their smartphone to make purchases because of security fears.

And 38% of 18 to 24 year olds said contactless payments seemed unreliable, given that the battery in their mobile device could fail in mid-transaction and possibly generate errors or other unforeseen consequences. Meanwhile, people over 55 predictably were more leery than their younger counterparts about contactless payment—only 24% of that demographic said they would be willing to use their smartphone for contactless payment.

“It appears the financial services industry and mobile providers still have a lot to do to convince the public of its merits,” says Mike from Firstsource. “More companies that are household names accepting contactless payments via smartphones will also increase confidence in the system.

“Until then, those companies that offer an alternative range of options to enable people to pay for goods and services are the ones that will enjoy the most success.” GP

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Joe Dysart is an Internet speaker and business consultant based in Manhattan.  He can be reached at joe@joedysart.com or at www.joedysart.com.