Also called tap-and-pay, contactless uses radio-frequency identification* (RFID) or near field communication* (NFC) to securely transmit payment data, in the form of a one-time code, from a payment card to the point-of-sale terminal. Multiple layers of embedded security and encryption protect against fraud and contactless only works when within an inch or two of the payment terminal.
Once a transaction is entered and totalled, the customer taps their payment device or card on the reader. The reader lights up and/or beeps as the code is read. On the display window of the payment terminal itself, it will say that the transaction is being processed. Rest assured, a customer can’t be billed twice, even if they accidentally tap twice.
There is no signature or PIN required for transactions below the CVM limit set by the card brand networks (like Visa and Mastercard). If contactless transactions are above the CVM limit, the customer will be prompted to enter a PIN, sign a receipt, or use CDCVM (PIN or biometric such as fingerprint entered on the mobile phone) if using a mobile phone. For your reference, Cardholder Verification Method (CVM) is security feature used to ensure that a credit card being used in a purchase is in the possession of its owner. The CVM security code is a 3 or 4-digit code imprinted on the physical credit card, but not embedded or encrypted in the magnetic stripe. The CVM is sometimes referred to as CVV2 or CID.
If your system is set up to supply a receipt, one will print if the transaction was processed successfully. Below the CVM limit, no receipt is required unless the customer requests it. Above the limit, a receipt is required.
How does contactless affect my payment acceptance?
The use of contactless technology has no bearing on transaction costs, but keep in mind that contactless payments are not to be confused with manual key entry. If you key your customer’s card information into your payment device, you’ll receive a higher interchange rate for the transaction.
A merchant’s card authentication or authorized contactless transactions (offline or online), as well as chargeback transaction liability remains the same as when a payment is made with a regular card.
There is also no difference in how Credit Card Cost Control services are applied to contactless transactions. Just make sure you have the surcharge disclosure clearly visible at your point-of-sale checkout and/or on your website.