How Contactless Payments Work

Contactless payments are a well-known consumer payment method that eliminates the need to swipe or insert cards or enter PINs. It is quick efficient, easy and provides an excellent alternative to mobile or cash wallets. Companies must be aware of how the technology works, the benefits and how they can make use of it.

When a customer makes a purchase with their electronic-wallet or contactless card, the device and the point of sale terminal communicate via radio waves that are short-term. A cryptographic code will be transmitted and, if certain conditions are fulfilled (e.g. the card is authenticated and funds are available) the transaction will be initiated by the merchant’s POS terminal.

The POS terminal will inform the user when the transaction is completed. It usually does this with a green checkmark an alarm or a green light. In certain instances the POS terminal may also ask the cardholder to contactless payments provide a signature before accepting payments made using contactless.

Contactless cards are more secure than magnetic stripe cards despite their convenience. This is due to the fact that the data on the microchip is encrypted securely. The information sent to a POS Terminal is encrypted. This makes it nearly impossible for criminals and hackers to get the information.

Contactless payments are a powerful tool for all merchants. With the right software, merchants can accept contactless payments using credit card and online ACH on a single platform. They can manage this platform from their accounting software in the back office.

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