First there was the swipe. Then came the dip. Now it’s all about the tap.

No, these aren’t the latest dance moves. We’re talking about the evolution of credit card payments.

Thanks to the advent of “digital wallets” that let consumers store payment card information on their smartphones, contactless—or “tap-and-go”—payments have been gaining traction in the U.S. Many banks are now introducing their own contactless credit cards, and by 2021, U.S. contactless card shipments are expected to reach 229.6 million, up from just 27.5 million in 2016.

For merchants, the benefits of moving to contactless payments can be significant, says Jacob Lunduski, lead credit card analyst for Credit Card Insider. A big one: They’re faster to use than traditional cards, and speeding up transactions means being able to serve more customers during peak hours. The result? A better customer experience and, in turn, “higher customer loyalty,” Lunduski says.

Yet for small businesses just now catching up with the EMV (Eurocard, Mastercard, Visa) chip, adopting another technology may feel overwhelming. It doesn’t have to be. If you’ve updated your point-of-sale (POS) system in the past couple of years, you probably already have the capability to accept contactless payments. And if you haven’t, there are low-cost solutions to help you make the transition.

Here’s what you need to know about contactless payments:


Consumers want it

Contactless credit cards have been slow to catch on in the U.S., but the rest of the world is already tapping. In fact, more than 40% of all Visa transactions outside of the U.S. happen with a tap. In Canada,  nearly 70% of transactions valued at less than $50 are tapped.

Big U.S. retailers are already responding by upgrading their POS systems to accept tap-and-go payments. Visa reports that 78 out of 100 of its largest U.S. merchants (based on transactions) already offer contactless payment options to their customers, and small businesses should be paying attention, says Eric Brown, CEO of Aliant Payments.

“Larger corporations spend a lot of money looking at the user and consumer experience,” Brown says. “Small businesses can take this page out of their books free of charge.”


They’re faster and safer

When Google Wallet (now Google Pay) was first released in 2011, the race was on to speed up transactions without compromising user data. Mobile apps, including Apple Pay, Fitbit Pay and Samsung Pay, joined Google in pulling small transactions out of the wallet and into the smartphone using near field communication (NFC) technology. Contactless credit cards use the same NFC platforms that customers are already familiar with.

“A huge benefit is the speed at which transactions take place on contactless credit cards,” Lunduski says. “It takes 30 seconds to close a transaction with an EMV (or dip) chip card, and cash is even slower. Contactless cards can complete the same transaction in half the time.”

Shrinking transaction times by a few seconds may not seem like much—unless you’re waiting in line for your morning latte on the way to work. If there are 20 customers ahead of you, contactless payments could cut your wait time by five minutes.

Another big plus is safety. The EMV chip was designed to stop fraudsters from stealing the personal data stored in the strips of traditional “swipe” cards. The chip creates a unique, encrypted file for every transaction, making it more difficult to access account information.

Contactless cards use the same EMV chip, but they also have a second chip that communicates with a contactless card reader’s NFC frequency. And most contactless payment systems protect both the user and the merchant by limiting the amount of each transaction to less than $50.


They’re easy to offer

According to A.T. Kearney, 70% of merchants across the country already have POS terminals capable of accepting contactless payments. And the technology is now standard on pretty much all of the POS systems being produced today, Brown says. “Like anything, most systems are going to be updated every few years, so if you’ve updated recently, you probably already have it,” he adds.

If you don’t have a contactless system in place, there are plenty of options for getting up to speed fast. Square, SumUp, iZettle, Clover and Poynt all offer smart terminals that will work with whatever payment type your customers want to use.

One concern business owners must consider is that, as with any other computer, there could be a risk of spyware or malware attacks and other viruses, which can lead to data breaches and stolen information, Lunduski cautions. So no matter what system you’re using, it’s important to update your security protocols regularly.

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