Payment technologies have evolved drastically over the years. One of the biggest changes is the increased demand for contactless payments. According to a recent Mastercard survey, 79% of consumers globally are using contactless card payments, and 82% view them as a cleaner way to pay. The trend seems here to stay, as nearly three-quarters state they will continue to use contactless payments.1
When a contactless transaction is initiated the cardholder remains in control of the payment throughout the transaction, eliminating the need to touch a screen or device that isn’t their own. While the most common contactless payments are completed with a contactless card or a mobile wallet, there are other payment methods that eliminate touchpoints. Some alternative methods can include in-app payments, mobile browser-based payments and online payments.
eCommerce transactions, whether completed online or by mobile device, allow a guest to make a purchase on their own device from the comfort of home or while out and about. With the familiarity of this process, these digital payment methods are quickly gaining traction. In fact, according to the Amadeus Travel Payments Guide 2020, 84% of respondents now pay with non-cash methods like contactless or mobile payments when traveling. That same study found that 14% of travelers would even abandon a transaction if a contactless payment option was not available .2
These shifting traveler behaviors mean that optimizing your payment acceptance methods is critical for creating trust with guests and continuing to generate revenue now, and in the future. Here are three things to know about contactless payments.
Benefits of contactless payments
Contactless payments are fast, easy and secure, presenting hoteliers that embrace them as forward-thinking. In addition to reducing slow moving lines and creating a frictionless checkout process, they provide valuable customer insights that businesses can use to develop more personalized experiences that drive sales and increase loyalty.
As data breach events remain a top concern, contactless cards and mobile wallets have the added benefit of being more secure, since they offer protection against fraud through tokenization technology. In fact, contactless cards have the lowest fraud rate of any type of payment. 3 This can help hotels mitigate the risk of potential data breach events and the reputational and financial losses that may result.
Cash payment has long been declining, representing only 26% of consumer transactions in 2019. 4 With contactless card transactions projected to reach $6 billion globally by 2024,5 businesses that invest in reduced-touch payment acceptance are better prepared for long-term growth and success.
Creating a touchless environment
There are obvious benefits to adopting contactless payments, but there are also some practical considerations to keep in mind. The first step is ensuring you have the right tools and technology. Mobile wallets and contactless cards operate via NFC (near field communication), which is simply a wireless method of transferring payment data. To be able to accept NFC payments in-person or on the go, having an EMV device is critical. There are both tethered and mobile options, giving hotels the flexibility to complete transactions at the counter, in the lobby, at the table or outdoors.
Remember that the device must be updated with the latest hardware and software and should adhere to the latest card brand and regulatory requirements. Many hotels will simply need to turn on contactless acceptance on the device if they have not yet done so.
Contactless cards and mobile wallets both have maximum transaction limits placed on them by the card brands and card issuing banks. This means that guests can only pay for purchases up to a certain amount. If their total is higher, the payment terminal triggers the cardholder to enter a PIN or sign for the transaction authorization.
It’s important to note that hotels get the benefit of the liability shifting to the card issuing bank if the transaction remains within the contactless limit. If a transaction goes outside the limit, then the business carries the potential liability for disputes associated with the transaction. Obviously, this could be a challenge for some hotel transactions.
Chip cards, contactless cards and digital wallets can all authorize transactions without requiring a signature, which is helpful when trying to create a touchless environment. While removing the signature capture requirement doesn’t pose any major risk it may result in losing chargeback disputes. The riskiest transactions are at hotel front desks or premier dining establishments that rely on a primary authorization and a subsequent final settlement.
As your hotel works towards minimizing touchpoints and migrating to contactless payments, keep in mind the human element is essential. While the adoption of contactless payments is increasing, there are still people who aren’t comfortable with it. Many Americans continue to prefer more traditional transactions, highlighting the importance of multiple payment acceptance methods. Certain populations may not be willing to learn or use the technology to enable a mobile wallet transaction. Another consideration is that not everyone has received a contactless card, although issuers are moving quickly to get them distributed.
Be prepared to help guests through the payment. Once they have a contactless card or mobile wallet set up, it may take some education to help them through the transaction. Staff may also need to be trained on contactless payments. It may also be helpful to equip staff on educating guests on the benefits of contactless payment methods.
While it’s impossible to predict the future, current data suggest that consumer demand for contactless payments will only grow. Hotels that choose to adapt and meet guest expectations stand to reap many advantages, including faster, safer and more secure and convenient payment transactions. They can also gain valuable guest insights and future-proof their operations for long-term payment acceptance.
Your hotel should be ready to meet cardholder demand and give your guests the choice to pay in safer ways. Cardholders are rapidly adopting digital payments so make sure your hotel is ready to support the payment options they prefer.
4 The Strawhecker Group and the Electronic Transactions Association