JANUARY 1, 2024
12 min read
The era of contactless payments is here. The popularity of the Tap to Pay enabled by Near Field Communication (NFC) technology started growing rapidly in the year 2020. Now, not only customers’ phones can be used to conduct transactions, but also mobile devices can be turned into POS terminals. This allows for easy and contactless customer-to-business (C2B) payments.
There are more than two billion NFC-enabled mobile devices, meaning that 20% of the population can have access to contactless payments. Apparently, in developed regions, this rate is notably higher.
In this post, I’ll delve you into the technicalities of Tap to Pay integration for businesses. The explanation will be complemented by outlining flows to set up Tap to Pay for users, i.e., business customers, to complete the picture. I’ll also share an example of payment processing flow with Tap to Pay and provide a review of businesses that can benefit from the technology in the first place.
What Is Tap to Pay?
For starters, as you can see from the graph above, the contactless payments market is predicted to grow steadily with a 20.49% CAGR. It indicated that more users get access to the Tap to Pay, and a higher percentage of them tend to adopt the technology in their daily payments.
I would also like to note that the contactless payments niche is split into smartphone-based and card-based payments. Smartphone-based payments are exactly where Tap to Pay technology comes into play.
So, how to use Tap to Pay as a business and what is this technology?
Tap to Pay is a contactless payment technology that allows users to make secure and convenient payments by simply tapping their payment-enabled device against a payment terminal.
This technology utilizes Near Field Communication (NFC) to facilitate the transaction and works with all devices supporting NFC, such as smartphones, smartwatches, or contactless credit and debit cards.
From a non-technical perspective, Tap to Pay is a magic wand that activates a certain action, like telekinesis. In this case, Tap to Pay moves the transaction details and user approval to transfer money to a business by wind, simply after tapping against a stationary or mobile POS terminal. This way, there is no need to swipe a card on the POS terminal and enter the PIN code.
How Does the Processing of a Payment with Tap to Pay Work?
From a technical point of view, Tap to Pay works quite simply. It can be split into two procedures, the first of which is the Tap to Pay setup performed by both parties involved independently and prior to actual payment processing:
- Merchant’s device setup. The merchant activates the Tap to Pay feature on their iPhone, effectively turning it into a POS terminal. This involves enabling the NFC reader capability of the device, typically through a compatible payment processing app.
- Customer’s device or card setup. The customer must have their payment method ready – this could be an iPhone, Apple Watch, or an NFC-enabled credit/debit card, all of which are capable of contactless communication.
The second procedure is the actual payment flow with the Tap to Pay functionality, which involves the following steps:
- Initiating the payment. The merchant enters the transaction amount in their payment app, which prepares the iPhone to process a payment.
- Customer interaction. The customer is then asked to place their iPhone, Apple Watch, or NFC-enabled card near the merchant’s iPhone. This proximity is crucial for the NFC technology to function.
- NFC communication. When the customer’s device/card is in close range, the NFC chips in both the merchant’s and customer’s devices engage in a secure communication exchange. Sensitive payment information like credit card numbers is tokenized for security, meaning it’s converted into a secure digital token.
- Payment processing. This step involves authentication, i.e., the customer’s device (if using Apple Pay) will prompt for authentication, which could be Face ID, Touch ID, or a passcode. Once authenticated, the payment information (tokenized data) is transmitted to the merchant’s iPhone. After that, the merchant’s device sends this data to the payment processor (like Stripe or a bank) via its internet connection.
- Completion of transaction. Next, the payment processor validates the transaction details with the customer’s bank or card network. Once approved, both the customer and merchant receive a confirmation, typically a notification or a visual cue on their respective devices.
- Post-transaction. Optionally, a digital receipt can be sent to the customer. The transaction details are recorded in the merchant’s payment app for accounting and record-keeping purposes.
With Tap to Pay, a phone is basically turned into a POS terminal, able to receive and send payments.
If you’re interested in the topic of contactless payments, you can also be curious to learn more about cross-border payments and money exchange from another our blog post.
Who Should Consider Integrating Tap To Pay in Their Apps?
The technology opens up business possibilities for easy transaction processes. Here are some of the businesses that can benefit from requesting Tap to Pay integration:
- Food trucks and street vendors. These small-scale businesses can implement Tap to Pay to allow customers to complete transactions quickly and effortlessly. This method is especially convenient for outdoor settings where traditional POS systems may be impractical.
- Event organizers. For events, Tap to Pay can revolutionize entry processes. Attendees may use their cellphones to tap for admittance, reducing the requirement for printed tickets or QR code scanning.
- Pop-up shops and temporary retail spaces. Tap to Pay offers a portable, low-hassle alternative for receiving payments, improving consumer convenience, and lowering setup difficulties.
- Providers of delivery services. Integrating Tap to Pay enables delivery personnel to accept payments directly through their phones, eliminating the need to carry cumbersome payment terminals.
- Farmers and local artisans at markets. For these vendors, Tap to Pay can simplify transactions, making it easier for customers to purchase products without the need for cash.
- Health and wellness service providers. Healthcare organizations or wellness businesses such as beauty studios, spas, and massage salons can use Tap to Pay to offer their clients a seamless payment experience. It is particularly useful for mobile professionals in this sector who travel to clients’ locations.
- Charities and non-profit organizations. Tap to Pay can make it easier for consumers to donate spontaneously and securely during fundraising events or in public places.
- Educational service providers. For private tutors, coaches, or small educational institutions, this technology offers a straightforward way to accept payment for sessions or courses.
In essence, the Tap to Pay function, integrated into an app, platform, or software solution of any kind, grants a range of businesses an effortless way to receive payments. DashDevs — a development agency, has integrated Tap to Pay into many fintech apps of our customers. According to our internal statistics, our customers’ clients utilize Tap to Pay by 67% more often than other payment methods.
Advantages of Tap to Pay with Phone Devices
Let’s discuss why Tap to Pay is becoming increasingly popular among users of phone devices and how it can benefit your business and customers:
- Speed and convenience. Unlike traditional card payments that often require entering a PIN or signing a receipt, Tap to Pay drastically reduces the time spent at the payment counter. Users can swiftly complete their transactions by just tapping their bank card or a phone on another mobile device.
- Efficiency for businesses. The swift nature of the Tap to Pay process reduces wait times and potentially increases overall sales. This is especially crucial in sectors where customer volume is high, such as cafes, food trucks, and retail stores.
- Security. Tap to Pay employs advanced encryption and authentication methods, similar to those used in Apple Pay, to ensure the safety of sensitive payment information. This reassurance adds to the feature’s appeal for users concerned about privacy.
- There is no need for additional hardware. Traditional point-of-sale systems often require separate hardware to security accept contactless payments. Tap to Pay eliminates this requirement, allowing businesses to save on the cost and space associated with additional payment terminals.
Tap to Pay is of great value to businesses looking for an easy way to receive payments and for customers who are in need of contactless payment methods. Making use of this option in one way or another is the right call for many companies.
Limitations Of Tap To Pay Technology
Tap to Pay comes with some limitations, as probably any technology does. Understanding these constraints is essential for businesses and consumers alike. The list of such considerations includes:
- Limited availability in select countries
- Support from only certain banks
- Device and platform compatibility issues
- Varying acceptance by merchants
- Security concerns reliant on device security
Tap to Pay quickly grows, so there are all means to anticipate seeing this technology represented in more countries and supported by more vendors.
How Your Users Set Up Tap to Pay on iPhone
Your users must have existing banking accounts and cards linked to them to access the functionality successfully. In case clients fail to pay via Tap to Pay technology, they probably don’t have this feature activated.
Here’s the user instruction on how to activate Tap to Pay on iPhone:
- Open your device’s Settings app and select the Wallet & Apple Pay menu.
- Click Add Card
- Tap Continue on the introduction page
- Select the type of payment card a user likes to add, whether it’s a credit or debit card
- Add a card by holding the phone over the card, letting the iPhone automatically read the number off the front of the card
- Or enter your card information manually by clicking Next and Back to switch between entering name and card number or expiration date and security code
- Then, a user will be displayed the Terms and Conditions page. Review the information and click Agree
- An iPhone will attempt to confirm the card with the card company and add it to the Wallet. For some cards, this happens automatically, while for other cards, a user might need to enter a verification code or otherwise communicate with their card company.
After that, your clients should be able to use Apple Tap to Pay and conduct contactless payments with any your business app that supports such functionality. You, as a business owner, don’t have to follow these steps. They are to be taken by your client, if they haven’t taken them already.
How Your Users Set Up Tap to Pay on Android
Your users must have existing banking accounts and cards linked to them to access the functionality successfully.
Here’s the user instruction on how to activate Tap to Pay on Android;
- Install the Google Pay app
- Open the Google Pay app
- At the top right, click your Profile picture, and then click Wallet
- At the bottom, click Add to Wallet
- Click Payment Card and then click New Credit or Debit card
- Use the camera to capture your card info or enter it manually
- If you’re asked to verify your payment method, choose an option from the list
- Enter the verification code
Upon the successful configuration of Tap to Pay via Google Pay, your clients will be able to conduct contactless payments via any your business app, platform, or software that supports such a functionality. You, as a business owner, don’t have to follow these steps. They are to be taken by your client, if they haven’t taken them already.
How to Integrate Tap to Pay in Your Business App with Stripe
iPhone Tap to Pay is available in a limited number of countries. The list includes Australia, the United Kingdom, Taiwan, the Netherlands, Brazil, Ukraine, France, and the United States.
Android Tap to Pay is available in more countries. The list includes Australia, the United Kingdom, the United States, Austria, Belgium, Canada, Finland, Ireland, Spain, Switzerland, and 13 more countries.
To be able to receive payment via Tap to Pay technology, you, as a business owner, should ensure that your branded app, platform, or software actually supports the technology.
Above all, you have a range of providers of Tap to Pay, whose capabilities you can use to integrate this useful functionality into the desired software. DashDevs has vast experience setting up Tap to Pay to software solutions in fintech, travel and hospitality, media, health and fitness, and other industries. Here is the list of tools we have worked with and recommend considering as your provider of Tap to Pay functionality:
For this example, let’s focus on the flow of Tap to Pay integration with Stripe.
Stripe is a technology company that builds economic infrastructure for the Internet. It serves as a bridge between companies and the various financial networks necessary for conducting online transactions. The company was among the first providers to start offering Tap to Pay. As of now, it remains one of the most popular payment partners, with 36.99% of the share in the payment management market.
Here’s what the procedure for implementing Tap to Pay with Stripe looks like:
- Create and verify Stripe Account. If you don’t already have a Stripe account, sign up for one on the Stripe website. Then, provide necessary business details for verification, including bank information and tax details.
- Integrate Stripe with your Android or iPhone-based business app. You’ll need to integrate Stripe into your mobile app. Stripe provides extensive documentation to guide you through this process. This process for Tap to Pay Android typically involves Setting up the Terminal Android SDK, adding a few lines of code to your app, connecting to the Tap to Pay reader, collecting the payment data with the Tap to Pay Reader, and confirming the payment.
- Configure your payment options. In your Stripe Dashboard, you must configure your payment options. This includes setting up Apple Pay or Google Pay as a payment method.
- Test the setup. Use Stripe’s sandbox environment to test the payment flow without making real transactions. Ensure that the system correctly handles various payment scenarios and errors.
- Start accepting payments. Once everything is set up and tested, switch from Stripe’s test mode to live mode in your Stripe Dashboard. Now, you can start accepting Tap to Pay payments on your iPhone via Stripe.
Setting up this system requires some technical knowledge. For many, the right call is to hire a software developer to help them set up the Tap to Pay functionality error-free. After all, the cost of not having Tap to Pay integrated properly at the beginning can result in bugs and errors in the payment process. It can also extend the development time for your app. Altogether, incorrect integration of Tap to Pay can lead to worsened user satisfaction and client losses.
Reasons for choosing Stripe as your trusted provider of Tap to Pay functionality are provided in the image below:
Tap to Pay’s influence spans across diverse industries and business scales. From SMBs to large retailers and service providers to transportation services, the benefits of Tap to Pay are clear: enhanced customer experiences, streamlined operations, and a gateway to innovation. By embracing this technology, businesses can position themselves as pioneers in modern payment solutions, thereby creating a seamless and efficient future for transactions worldwide.
While activation of the Tap to Pay function on a user’s supported Android or iOS device is not an issue, integrating Tap to Pay into a business app is a more complex intervention. Consider DashDevs — a fintech provider with over 12 years of experience on the market, as your trusted development partner. We’ll ensure complete support of Tap to Pay for your app, platform, or another software solution and connect you to the realm of contactless payments.