With all the focus on touch-free checkout experiences, one could wonder why all merchants haven’t adopted and configured their terminals to accept contactless cards and wallets. PaymentsSource offers up some background on just what a merchant has to go through to accept contactless:
“On the hardware side, you need a device that supports contactless by having the antenna that produces the fields that power the contactless card and allows communication, and you also need the correct software to communicate to that card,” said Andrew Jamieson, technology and security director at UL LLC (formerly Underwriters Laboratories).
In addition to having communication technology in place, merchants also have to be aware of specific software that each card brand requires so that kernels, or computer system cores, can “talk to the cards,” Jamieson added. “Then the payment application has to be aware of certain things to make the best use of a contactless card, and to finally set up the customer interaction.”
Mobile devices bring their own level of complexity, through a tokenized personal account number and a different cryptographic key to authenticate a transaction. All of that has to transfer through various layers of an operating system to the hardware, where Near Field Communication integrates to communicate to the terminal.
It is easy to see why retailers are increasingly confused about what to do next at a time when consumers have all sorts of payment options — and leaning toward contactless more than ever, said Maria Arminio, president of Avenue B Consulting Inc., a Redondo Beach, Calif.-based payments management consulting firm.
“It is difficult to reconfigure a terminal to support a contactless chip or even a contact chip,” Arminio said. “It’s very complicated and most merchants are not willing to invest the time needed to make the change, especially if they are not seeing a whole lot of transactions coming out of that environment.”
Because converting to contactless or NFC technology is expensive and demands a time commitment, merchants might be inclined to find an easier and less expensive option such as supporting QR codes, which don’t call for as many configuration changes, Arminio added.
In a cited report from the National Retail Federation, 56% of merchants have figured out how to get this done, despite the complexities, and offer contactless options today.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
