Contactless payments are a well-known consumer payment method that eliminates the need to swipe or insert cards or enter PINs. It is quick and easy to use, and offers an alternative to mobile or cash wallets. The technology is rapidly growing and businesses must understand how it works, what its advantages are, and how they can benefit from it.

When a buyer purchases something with their electronic-wallet or contactless card, the device and the terminal at the point of sale communicate via short-term radio waves. A cryptographic code is transmitted, and if the transaction meets certain conditions (e.g., the card is authenticated and funds are available) the merchant’s POS terminal will trigger a transaction.

The POS terminal will inform the customer when the transaction is completed. This usually happens with a green checkmark beep or a green light. In some instances, the POS terminal may also require the cardholder to sign the signature of a person who will accept a contactless transaction.

In addition to their convenience, contactless cards offer more security than magnetic stripe cards because the information is securely encoded on a microchip. In addition, the data that is transmitted to the POS terminal is encrypted, which makes it virtually impossible for hackers to intercept the information and use it for fraudulent transactions.

For these reasons, contactless payments are an effective tool for businesses of all sizes. With the right software, merchants can accept both contactless payments via credit card and online ACH through a single system. They can manage this platform through their accounting software in the back office.

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