In short, tap to phone is a no additional hardware solution to enable your smartphone or tablet to accept contactless card present payments and become a Point of Sale terminal. Thanks to new regulations regarding PIN entry on a touchscreen, this software-based solution becomes available with no extra hardware. So forget the old physical PIN pad that you always needed before, and say welcome to the new software solution where all you need is a smartphone or tablet with an NFC chip that can accept contactless card payments.
The background
Most of us have probably experienced an in-store visit that ended in a card payment where we swipe, tap, or dip our card into a big plastic card reader with a physical PIN pad on the same device. This has been the case for decades due to regulations of the terminals and the PIN entry on them. Why you might ask? Because when it comes to payments, the standards and regulations have always been “better safe than sorry”. An approach hard to argue against.
During these decades technology has improved and we have shifted from no mobile phones to Snake-ready Nokias, to touchscreen devices and now the era of smartphones, smartwatches, tablets, and even rings with contactless payments implemented into the devices. The technology behind it is a Near Field Communication (NFC) chip, which is present in both the terminal and the device. Contactless payments, as this is called, have been increasing throughout the world and the last year with COVID-19 has really increased that shift. But for the terminals, we still encounter the old ones with a physical PIN pad.
So why aren’t we just tapping our devices against each other, removing the old terminal from the ecosystem?
Great question, indeed. Remember what we said about the approach of “Better safe than sorry” when it comes to payments? Well, we are finally there now. Where we are safe, that means that thanks to the new regulations from PCI regarding PIN on screen, or PIN on Mobile as the experts call it, we can finally start accepting contactless payments on our devices. And whenever an authentication by PIN is required, that might be when an amount is met, or when the cardholder has made a certain number of payments without the PIN needed, there are now certified PIN apps that the software can trigger. So how will these new contactless payments work? You simply hold out your smartphone or tablet as a merchant, and the customer just taps their card or other contactless payment methods (eg. smartwatch, smartphone) to that device and you now have yourself a smart terminal in your hand.
We find many names for those we love
You might’ve heard people talking about tap to phone, tap on phone, tap to pay, SoftPOS, and SmartPOS. There are a few differences and a few synonyms in play here. First of all, to enable the smartphone or tablet to accept contactless payments via the NFC chip, the merchant needs to download an app supported by their acquirer. This is the tap to phone (named by VISA), tap to pay (also named by VISA), and tap on phone (named by MasterCard) app that gives the smartphone or tablet the possibility to become a SmartPOS or SoftPOS. Hopefully, that makes it more clear. The app that the device uses = tap to phone, and the device itself becomes a SoftPOS (software-based Point of sale) when using that app.
The huge benefits
There are a lot of different types of benefits that we can find in this new shift, or era of payments if you will. While different payment methods are increasing rapidly and cash is decreasing at the same speed, many merchants are left with the choice of investing in the old type of terminals to keep their business and start asking their employees to accept direct payment methods like Swish personally for customers who enter the store without their card and then pay with their own card which they as cashier has with them. Since the implementation cost is high and the time is long for new payment methods for merchants they get left behind.
Tap to phone, or SPoC (Software-Based PIN Entry on Commercial off-the-shelf devices) and CPoC (Contactless Payment on Commercial off-the-shelf devices) as they were named upon birth are bringing the customer-facing screen into the merchant world. The shift lets us move away from the old payment terminals and instead focus on the ease of accepting contactless card-present payments on any smartphone or tablet running Android or iOS. This new use of terminals, SoftPOS, tap to phone, or whatever you want to call it, will help not only current merchants to increase their sales but also to ensure the future for any small or micro merchant across the globe who suffers from today’s decrease in cash payments.
If we look closer at tier 1 and 2 merchants, this shift will bring out new opportunities. Once the customers’ full focus can be on the screen in front of them, instead of on the big plastic terminal, the merchant will be able to use that focus for marketing, loyalty plays and incorporate all that data into a new lifecycle of a customer relationship. The data will help the merchant to grow while the technology will help the customer to get a better in-store experience, multiple payment options, personalized offers, and digital receipts.
All of that, and much more, are now available thanks to the new regulations and the introduction of tap to phone. During the later parts of 2021, we are releasing our very own payment app for any micro-merchant and small business owner to use. With the app, Surfpay, you will be able to accept contactless card payments directly on your own smartphone without the need to purchase any new hardware. Learn more about Surfpay here »
Are you interested in learning more about this new technology and see how we can help you to adapt to the new tap to phone world order? Fill out the form below.