PayPass and PayWave: Our guide to accepting tap-and-go and contactless cards

If you’re running a business, then you need to accept tap-and-go payments. Not only could it save you in eftpos fees but it’s also customers’ preferred way to pay. Just make sure your eftpos provider offers least-cost-routing.

Tap and go transaction

What is a tap-and-go transaction?

Tap-and-go, also known as contactless, is a new method of making a card payment, whereby the customer does not need to swipe or insert their card. Instead, they tap their contactless card on top of an eftpos terminal.

The card has an in-built chip and antenna that securely and wirelessly transmits data to the eftpos machine. If the value of the transaction is less than $100, then the transaction is complete. Otherwise, the customer will have to type in their pin to complete the transaction.

If customers have stored their card details on a smart device, such as a smartphone or watch, then they can also tap those devices about the eftpos machine to take a payment.

Why should I accept tap-and-go transactions?

There are a number of reasons why you should accept tap-and-go transactions. These include:

  • Tap-and-go is the payment method in 90% of transactions, according to Westpac data
  • Contactless payments are faster than insert or swipe payments, meaning shorter queues for customers
  • More card payments means less cash handling costs for your business
  • Customers want to pay using cards on their mobile phones, which required tap-and-go technology

How can I accept tap-and-go transactions?

For those who are opening a business or purchasing an eftpos machine for the first time, you’ll be happy to hear that you can accept tap-and-go transactions through any eftpos machine.

This is because Eftpos, Visa, MasterCard and American Express have all built their contactless technology using a standard format called ISO 14443 A/B.

And this also applies to contactless phone and watch transactions, such as iPhones, Android Phones and Apple Watches.

To confirm that your eftpos machine can accept tap-and-go transactions, keep an eye out for the logos below.

Tap-and-go and contactless card icons

Tap-and-go and contactless card icons. Source: Mastercard

Do tap-and-go transactions cost more?

Card networks, such as Visa and Mastercard, do not charge extra for tap-and-go transactions. But that’s not quite the whole story.

If you open up your wallet and take a look at your debit cards, you will notice that it has both an eftpos logo on the back and another logo on the front (e.g. Visa or Mastercard). This is what’s known as a dual network card. Dual network cards can process transactions through either the eftpos network (by pressing CHQ or SAV) or the Visa/Mastercard networks (by pressing CR).

As a merchant, there is a difference between these networks: usually the eftpos network has lower transaction fees. This means that you’d rather customers press CHQ or SAV, so that you get a lower monthly bill.

But what about tap-and-go transactions? In this case, the customer does not press any button on the eftpos machine.

For many years, these transactions would be automatically processed through the Visa/Mastercard network. But the Reserve Bank has pushed banks to offer a new functionality called least-cost routing, which automatically processes transactions using the cheapest network (usually eftpos).

According to Tyro, least-cost routing saves merchants an average of 8.1% on their transaction fees. So the key takeaway here is that merchants should look for an eftpos solution that offers least-cost routing. Not all providers offer the solution, so it’s worth shopping around.

Is tap-and-go secure?

The short answer is yes, tap-and-go is very secure. In fact, there are a number of precautions built into the contactless card technology that protect merchants from potential issues. These include:

  • Each transaction has a unique authentication code, which means that a payment cannot be put through twice
  • The contactless card has built-in encryption technology for data protection and security
  • A card must be within 3-4cm of the eftpos machine for a transaction to go through, so there’s little chance of the wrong person accidentally making a payment
Contactless card showing antenna outline

A contactless Mastercard showing the built-in antenna. Source: arXiv.org

Who is liable for fraud on tap-and-go cards?

You might be thinking “what is a customer steals a contactless card and uses it at my store?”.

That’s a fair concern, as nobody wants to be accepting payments from a stolen card. But you’ll be relieved to know that practically all contactless cards are covered by a zero liability policy.

This means that merchants are not liable to pay back any funds from stolen contactless cards. But, as always, it’s worth confirming this with your eftpos machine provider just in case.