How do contactless payments work?

Mar 19 2021 | Julie Warshaw

Social distancing and other safety measures have led to an increased interest in contactless or "touch-free" payments. In other words, small businesses are looking for ways to accept payments without their employees handling cash, and customers want to avoid handing over their credit cards or touching a payment terminal.
The pandemic changed a lot of things about the way your customers shop. Browsing the aisles and standing in line to pay has been replaced by browsing a website and picking up purchases curbside. Chatting with the cashier? Not very easy when you have to do it through Plexiglass. And handling a credit card or cash that someone else has just touched? No thanks.

What is contactless technology and how do contactless payments work?
Contactless payment technology encompasses a number of different types of payment methods. We've grouped some of the more common contactless payment technologies into two categories, depending on the equipment required by you and your customers:
  • For contactless credit and debit cards or a digital wallet like Apple Pay or Google Pay, you would need a near-field communications (NFC)-enabled payment terminal. The customer can pay by simply holding their credit card over the terminal, or if they're paying from their digital wallet, by holding their phone over the terminal.
  • Smartphones can also scan QR codes that are linked to your business, so customers can pay and go without making contact. Once you've created a QR code, just display the code where shoppers check out. Your customer scans the QR code using their payment app, enters the amount to send, and then pays.
Whether a credit card is able to be used for touch-free payments depends on the actual card itself. Credit card companies have worked hard to transition from swipe-only technology to secure EMV chips, but some chip cards don't have the embedded antenna needed for touch-free payments. You can tell if a customer's card can make touch-free payments by looking to see if it has a wireless wave-like symbol on it. If not, the customer can still pay touch-free using their smartphone to scan your payment QR code.

Measure the growing popularity of contactless payments.
While customers have been making
contactless payments for years, the recent pandemic has accelerated the adoption of this type of payment. According to research, 57% of consumers say a store's digital payment offerings impact their willingness to shop there,1 with 26% saying stores must accept contactless cards for them to feel comfortable going inside to shop.2

Accepting touch-free payments is key to reaching digital-native consumers like Gen Z and millennials, with more than 70% in both categories saying that digital payment options are a deciding factor in where they shop.3 That said, digital payment methods are popular with shoppers of every age: nearly 55% of Gen X and 46% of baby boomers and seniors also say digital payment options are important for in-store shopping.4 Contactless payments are beneficial for a variety of reasons.
  • Added security. A touch-free payment creates a one-time, encrypted code that is unique to that transaction. This helps protect the customer's payment information. When shoppers don't need to sign anything or enter a PIN, less of their sensitive personal information is exposed. 
  • Faster check out. Contactless terminal payments usually require only a single action, like tapping the card or pushing an app button on a smart device. Making a QR code payment takes just two steps: scanning the code and entering the amount to pay. Customers can be on their way faster when they're not swiping a card and signing a receipt or handing over cash and waiting for change.
  • Safer for everyone. Even before the pandemic, many shoppers wanted to avoid touching a germy PIN pad. Since the spread of the coronavirus, people are extra careful to keep their distance and limit physical interactions as much as possible. With contactless payments, your shoppers only have to touch their phone or card, protecting themselves and your staff from unnecessary contact.
How to offer touch-free payments. 
You need a contactless terminal to accept touch-free payments from a card or phone, but you don't need any special hardware to accept QR code payments.

You can create a QR code to accept PayPal payments using the PayPal Business app or by logging into your PayPal Business account. Print and place your QR code on your counter, your register, or somewhere else that is convenient for a customer to scan. When the customer is ready to pay, all they have to do is open the PayPal app on their phone, scan the QR code, enter the amount to pay, and press Send.
 Learn more about accepting PayPal with QR codes.

Tips to make the touch-free payment process easy for your customers and staff:
  1. Think about placement. Put your payment terminal on the customer's side of the register, so they don't have to reach over and get too close to your cashier. But make sure it isn't in blocking counter space that your staff might need for scanning products or bagging goods.
  2. Encourage customers to make contactless payments. Because people may choose one store over another based on availability of contactless payments, it's important to let shoppers know they can pay touch-free in your store. Put signs on your front door and around your checkout area telling customers that you accept contactless payments. You can even add messaging to your website, social media pages, and marketing emails so that online shoppers know it's an option when they visit your brick-and-mortar store. 
  3. Train your staff. As more people adopt contactless payments, you may find some customers are making their very first touch-free payment at your store. They'll be relying on your staff if they need help with things like scanning a QR code or accessing their digital wallet.
Touch-free is likely the future of in-person transactions. Contactless payments help keep customers and employees safe, while improving checkout speed and security. When shoppers know they have touch-free payment options, they're more likely to feel comfortable shopping at your store.

The contents of this site are provided for informational purposes only. You should always obtain independent, professional accounting, financial, and legal advice before making any business decision. 

1–4. How We Shop: Measuring the Rapid Digital Shift, survey done in collaboration with and supported by PayPal, August 2020. Methodology: Online survey conducted across 2,163 U.S. consumers.

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Frequently asked questions.

You can use your PayPal account with Google pay in 3 ways: To make purchases at any in-store merchant that accepts Mastercard Contactless Payments, when shopping in an app, or when you use the Chrome mobile web browser to checkout.

In Store: When you use Google Pay to pay in-store, PayPal will use the balance on your account to fund the transaction. If you don’t have enough money in your PayPal balance at the time of purchase, we'll automatically use your bank or debit card to add money in increments of $10 to your PayPal balance first to cover the purchase.

Chrome mobile web browser: If you’re using the Chrome mobile browser and check out using PayPal with Google Pay, you’ll be asked if you’d like to pay with PayPal. If you do, put your finger on your phone’s fingerprint scanner to complete the purchase. There’s no need to log in with your username and password, authenticate using your biometrics, and then pay with any of your available payment methods.

Online or in app: You can choose PayPal from within the Google Pay wallet anywhere you see Google Pay button. If you have not added PayPal to your Google Pay wallet, you will go through linking PayPal account to Google Pay.

Need more help?

How do I turn off automatic top up for Google Pay?  
How do I change how much comes out each time my Google Pay account automatically tops up?
How can I add PayPal to Google Pay?
When will my Google Pay account automatically top up?
How can I withdraw money left over from an Google Pay transaction?
How do I update or reset my Google Pay PIN?
How do I remove PayPal from Google Pay?
How do I make PayPal the default payment method on Google Pay?
Can I have multiple PayPal accounts linked to Google Pay?
What happens if my mobile device is lost or stolen?
How can I get a refund on an Google Pay purchase?
Why do I need to create a PIN for Google Pay?  

At PayPal, we are constantly working to offer our customers the best payment experience.

We will be making some enhancements to our Customer Identification Program (CIP) for our customers. Through Facial Biometric Identity verification, we can use the latest technology to help protect you against identity theft and fraudulent activity quickly and efficiently.
What’s Facial Biometric identity verification?
Facial Biometric identity verification is a secure way of confirming your identity by scanning your driver’s license or Government-issued photo id (front and back) and matching it with a selfie you take of your face.

How does it work?
Using your device’s camera, you’ll scan your photo ID and your face. Then we compare the scans to confirm your identity.

What do I need to do?
When receiving PayPal’s notification to confirm your identity, you’ll need to download or update the latest version of the PayPal app to proceed with the process.

Can you confirm another way?
Yes. Instead of scanning, use a computer to log into Paypal and provide the required information.

What can I upload?
Usually, we’ll need a copy of your government-issued ID and proof of address issued within the past 12 months. You can take photos of them with your phone and upload them to us.
Business accounts will have to submit business-related documents.
How do I upload files to PayPal?
You upload files to your PayPal account. Log in to your PayPal account on a web browser and go to your Confirm your Identity page, or click the bell icon near the top of the page.
How long will it take to review my documents?
We’ll try to review your documents within 2 business days, but sometimes it may take longer.
What if I don’t want to confirm my identity?
You may lose some PayPal features, like the PayPal Debit Card or the ability to add money to PayPal from your bank account.
What if I’ve already uploaded the documents for my other PayPal account?
Please upload documents separately for each PayPal account.

The Zettle card reader:
  • Connects to your device via Low Energy Bluetooth.
  • Accepts chip and PIN, contactless payments, and mobile payments including Apple Pay, Google Pay and Samsung Pay.
  • For chip and PIN payments and contactless payments above a certain amount, payments are approved with the customer’s PIN.
  • Charges via USB cable (approximately 1‒2 hours). Compatible with the Zettle Dock 2.  
  • 8-hour battery life (100 payments).
Get a Reader

Connecting the Zettle by PayPal Reader via Bluetooth

To connect any Zettle card reader with your smartphone or tablet, open the PayPal Zettle app and go to Settings, then Card readers. Follow the on-screen instructions.

Compatible smartphones and tablets

The Zettle card reader can be used with a variety of iOS and Android devices. You’ll need to connect your card reader and device via Bluetooth first. Check if your device is compatible here.

Important notice about use

PayPal Zettle supplies the card reader device for use by you or your business, as applicable, and you agree not to use the product for any resale purposes. Do not use the product for any purpose other than effecting payment transactions through your installed version of the PayPal Zettle mobile software application. You may not modify the software or the hardware of the product in any way, save to the extent permitted by mandatory law.

Handling and caring for your Reader

Keep the card reader in a cool, dry place (ideally, 22° C). Use a soft, damp cloth to clean the device’s exterior. Don’t spray any type of liquid directly onto the device and avoid exposure of any of its openings to moisture. Don’t use solvents. Ensure that nothing enters your card reader through any openings, such as the card slots. Avoid causing shock or negligent handling of your card reader.
Accepting Venmo payments is a new way to get paid that's fast, easy and minimizes your need to physically touch cash or your card reader. To use this payment method, you need to be on iOS 13 or above for Apple iOS devices and Android 5 or above for Android devices.

How does it work?

In your PayPal Zettle app, you generate a QR code for each transaction. To pay, your customer opens the camera on their phone, or PayPal app, and scans the code to pay.

To accept payments with Venmo:

  1. Select Venmo from your list of payment options in the checkout.
  2. Ask your customer to open the camera on their phone or PayPal app (your customer must have a PayPal account to use this feature).
  3. Present your QR code for them to scan.
  4. Ask them to tap confirm on their phone.

How much does it cost?

The Venmo transaction fee is 1.9% + $0.10 USD for payments $10.01 USD and above, and 2.4% + $0.05 USD for payments $10.00 USD and below.

What are the transaction limits for paying with Venmo?

A lower limit of $1.00 USD and a higher limit of $5,000.00 USD.

Can I deactivate the feature if I want to?

Yes. Go back to Settings in your app and toggle the Venmo option to turn it off.

Do all devices have access to this payment method?

Venmo payments are only available to smartphones and tablets running the PayPal Zettle app on iOS 13 or Android 5.0 and higher.

Do I need a Venmo account to accept Venmo payments?

No. You can accept Venmo payments from your PayPal Zettle app.

When will my money be deposited?

As soon as the payment has been accepted.

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