Tap-and-pay:  Consumers expect it. Merchants need it.

Blog Post created by on May 11, 2016

EMV chip card transactions moved to the forefront of payments conversations even before last fall’s fraud chargeback liability shift. But many SMB merchants have overlooked the other payment type most EMV terminals enable– Near Field Communication (NFC) contactless “tap-and-pay” payments.


While EMV adoption has been slower than expected, with only 37 percent of U.S. merchant locations EMV ready four months after the liability shift, the number of consumers making tap-and-pay mobile payments is expected to rise 62 percent in 2016. As mobile payments continue to gain ground among consumers, developers can capitalize on the fact that EMV enabled technology also opens the door to tap-and-pay transactions.


One of the biggest use cases for implementing tap-and-pay functionality is speed. Chip card “dip” transactions tend to take longer than traditional mag-stripe card swipe transactions. Additionally, the EMV learning curve for both merchants and consumers is creating frustrating delays at checkout– a recent survey found that nearly one in five chip card users think EMV transactions take too long.


In contrast, tap-and-pay transactions like Apple Pay take just a few seconds. And many younger consumers who are accustomed to using their mobile phones to manage nearly every facet of their lives are already comfortable with the idea of using their phone to make payments.  A recent survey by Vantiv and Socratic Technology revealed that Millennials (46%) and GenXers (41%) are the heaviest and most frequent users of mobile payments.


Tap-and-pay also opens the door for developers to provide additional consumer convenience by facilitating sales anywhere, anytime. Creating an environment where a mobile wallet is accepted across all channels, both instore with tap-and-pay or via in-app payments, helps a merchant extend their brand and build customer loyalty.

Again, Millennials are the group most likely to appreciate this type of shopping experience by using their mobile devices in conjunction with in-store experiences. Results from Vantiv’s 2015 Consumer Survey showed that 54 percent of Millennials use their mobile devices to retrieve coupons/deals, 48 percent to check prices, 43 percent to make purchases, and 40 percent to review loyalty points.


Security is also a big selling factor for tap-and-pay. EMV chip cards come enabled with an embedded chip that packs in strong security features beyond the capabilities of traditional magstripe cards. It’s important to note, however, that these extra security features aren't fully applicable when shopping online.


While consumers can pick and choose from multiple payment options, NFC technology has a single standard for developers, creating consistency across various platforms. With offerings from Apple, Google, Samsung, and PayPal, developers should be considering where the market is moving. Since their phones and technology are already in the majority of consumers’ hands, Apple Pay and Android Pay are poised to continue to lead the pack of mobile payment options. Whatever mobile wallet ends up on top, NFC will remain the behind-the-scenes technology powering it.


Looking ahead, the next big opportunity for developers lies in supporting digitizing of gift and loyalty cards, coupons and offers, inserting these into mobile wallets, and presenting them over NFC. Vantiv is currently working with Google and Apple to make sure that the next generation of EMV/NFC hardware will support these emerging technologies. As a developer, if you haven’t yet enabled EMV/NFC into your offering, you risk losing merchants that are trending toward payment solutions that are supported by these technologies.


The over-arching advantage of tap-and-pay functionality is enabling merchant and customer convenience through speed, security, and loyalty building features that span all sales channels. Developers that identify the most promising merchant groups (like the aforementioned industries that rely more heavily on timely delivery of goods and services) and highlight tap-and-pay as a value-add, are likely to experience greater success in the marketplace.


Vantiv offers semi-integrated EMV products that are NFC enabled, and welcomes the opportunity to discuss your integration needs for tap-and-pay functionality. Contact us to learn more, and stay tuned for more on this topic.