Since the middle of 2021, there’s been a continuing shortage of semiconductor chips, which are a key component of mobile phones, computers, televisions, and last but not least, point-of-sale (POS) terminals. This shortage has caused a disruption in the payments processing industry and many merchants are having a tough time getting their hands on traditional POS devices.
Like other fintech companies, we’ve experienced a shortage of terminals that require semiconductor chips for operation, including the Dejavoo Z9 WiFi terminal which is available in wireless; the Clover Station Duo LTE which is available with WiFi; and the ever-popular Clover Mini. We’re also dealing with the restricted availability of the PAX A line.
A New World of Payments
While this worldwide shortage may be inconvenient, it’s opening up the door for the widespread adoption of tap-to-mobile technology. Tap-to-mobile transactions are made possible by a short-range wireless communication network that transmits data from your debit or credit card to a merchant’s mobile phone. These payments are similar to tap-to-pay transactions, but instead of requiring a POS terminal, it just requires the merchant to download an app on their smartphone.
The technology behind both tap-to-mobile and tap-to-pay payments has been around for decades, but it’s just now picking up steam due to the semiconductor chip shortage, as well as the hygiene concerns of the COVID-19 pandemic. Let’s discuss why this move toward widespread adoption is beneficial for both merchants and consumers.
- Major Savings: Approximately 85 percent of Americans own a smartphone so, for most business owners, the cost to start accepting tap-to-mobile payments is $0. The cost of purchasing a payment terminal is often a barrier of entry for entrepreneurs just starting out, so this eliminates that barrier.
- Preference for Contactless: A study from Visa found that 63 percent of consumers say they would switch to a new business that installed contactless payment options. Especially among the younger generations, there’s a clear preference for this type of payment.
- Safer Method: Contactless payments utilize one-time codes to send encrypted financial information to merchants. In many cases, completing a tap-to-mobile or tap-to-pay transaction is more secure than a regular chip or stripe payment.
- Easy Setup: As opposed to using a traditional payment terminal, opting to utilize tap-to-mobile technology requires very little setup. All you need to do is download the appropriate app, input your details, and start accepting payments.
Are you interested in offering tap-to-mobile and tap-to-pay options to your customers? Contact us to learn more about these two payment methods that are changing the payments landscape for the better.