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How contactless payment could revolutionise small businesses operations
The rise of contactless payment could give small businesses a much-needed boost. This is what you need to know about the technology’s explosion in Singapore and how it benefits small business operations.
Rise of contactless payment technology
Around a decade ago, Near-Field Communications (NFC) was heralded as the next big thing in Singapore. The technology enables two devices to exchange data when close together, allowing mobile phones to become contactless payment tools.
Before this, there were contactless payment cards. The first example in Singapore was EZ-Link, introduced in 2001 so commuters could pay for and board public transport faster. It evolved into the standard known as CEPAS compliant or Contactless ePurse Applications - a hybrid payments card for transport and daily shopping.
The following years saw many more contactless payment options being launched in Singapore. The NETS FlashPay, the Visa PayWave, the MasterCard PayPass and most recently the Apple Pay for American Expresss-issued cards all signal the rise of contactless payments, not to mention the grant of rights for EZ-Link to develop mobile payments infrastructure in 2012.
Fast-forward to April 2016, when telecommunications provider Singtel announced the upcoming launch of its NFC-enabled SIM, which will allow people to pay for transit trips with smartphones using the embedded EZ-Link purse. This development signals a shift to contactless payment and is taking hold in Singapore, as it has in other parts of the world. For a glimpse of what may come, you can look to Europe, where new research by Gemalto reveals nine in 10 businesses have invested in a contactless solutions, with the remaining 10 percent planning to.
The recent announcement that Singaporeans will soon be able to use their smartphones to pay for transit rides is good news for small businesses. The emergence of mobile devices as tools for contactless payment indicates Singapore is closer to being a cashless society, and opportunities are growing for businesses to leverage the technology to improve operations and boost sales.
Singapore's business owners should prepare for change. After predicting that contactless payment technology would shake up markets in 2016, Deloitte warns consumer-facing businesses needed to adapt rapidly to rising demand for these payment options.
Now you know how contactless payment technology has evolved, we can look at how it impacts small businesses.
Benefits for small business
Firstly, contactless payments can be conducted much faster than traditional transactions. They are more convenient for both retailers and shoppers, who can simply wave a card or smartphone by a terminal, no PIN or signature needed. It's no surprise 74 percent of European businesses surveyed by Gemalto cited faster payments as a top driver for adoption.
Contactless payments can also improve customer service and retention. You can serve faster and cut down queues, which reduces the risk of customers walking away during busy periods.
For small businesses with high turnover rates, like cafes that get swamped at lunchtime, the reduction of complicated transaction processes can lead to significant gains in efficiency and productivity. It also reduces the cash management burden and hassles from running out of change.
Lastly, there may be cost savings. A study conducted by University of Canberra’s Centre for Internet Safety found that in Australia, for low value transactions under $25, contactless payments cost nine cents less per transaction. Add to this the time saved and the resulting cost savings and contact payments can make a huge difference to the business bottom line.
How you can leverage contactless
To leverage contactless payments in your business, you need to explore available services. Several smartphone apps even have features tailored for small businesses.
Consider Dash, which was created by Singtel and Standard Chartered and is available at over 20,000 locations. It's one of the few with features for businesses, such as access to information on customer spending patterns, and other insights that can help increase sales and customer retention. Partner businesses also benefit from having customers channelled to their stores by the app, which pushes notifications to nearby smartphones.
United Overseas Bank’s UOB Mighty app enables payments with token-based security encryption. While it doesn’t have features for business owners, it does include a restaurant directory and dining-related services for consumers.
A contactless payments card to consider is NETS FlashPay, which is accepted at over 91,000 locations and can be integrated with your customer loyalty programs. NETS also has an app that lets consumers top up cards using their mobile.
Finally, Visa has significant contactless infrastructure with over 12,000 Visa payWave points in Singapore. In 2013, the card company moved to enable mobile payments by linking Visa prepaid accounts to Singtel’s mobile money solution mCash.
The shift to contactless payment technology is opening up new opportunities for small businesses to strengthen customer loyalty and increase sales. To leverage the benefits, you need to determine which solutions suit your business and, once enabled, encourage contactless payments in your stores with signage. The benefits for small business include:
- Faster payments resulting in greater sales, especially during peak periods.
- Improved customer service, retention and efficiency.
- The growth of a host of payments apps and cards in the region for businesses to choose from.