Tap & Contactless Payments
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Eric: Hello, and welcome to “What Matters Most,” a podcast all about finances, community savings, and security for you, your family, and your business. This podcast is brought to you by the helpful folks at My Bank, First United Bank & Trust. I’m your host, Eric Nutter. And in today’s episode, What Matters Most” are tap and contactless payments for businesses. And for this helpful discussion, I am so happy today to be joined by Katie McMillan, director of sales at MPI, the merchant processing partner for First United. Hey Katie, how are you today?
Katie: I’m doing well. Thank you for having me.
Eric: I appreciate you joining me. So because this is your first time on the podcast and talking to our listeners, why don’t you tell us a little bit about what MPI is, what you do there, and how you help our business customers with their business needs?
Katie: Absolutely. MPI is a merchant services provider that services the Maryland, Delaware, West Virginia, Pennsylvania region. And we offer a suite of robust business solutions that accompany the merchant services. We offer payroll, ATMs, gift, and loyalty as well. And we’ve partnered with First United to give the merchants that are using First United’s products and services the ability to accept payments in the best way possible at a rate that can be afforded with service that they expect. My role here at the company is I’m the director of sales and I manage the internal and external sales strategy for the company.
Eric: Awesome. It sounds like it’s oftentimes rewarding work to be able to work with a lot of different businesses because you can kind of see a bunch of different businesses and the way they do things and kind of how you can help them succeed and make their business stronger and better. I’m sure that’s really fun for you to see that happen.
Katie: It’s so amazing that every single business that we touch, there’s always something different that we feel that we can do to help them run their business better, to help put time back into their day, to help put, you know, money back into their bank account, to make sure that their business is running at maximum efficiency. And it feels really great to be able to give back to the community.
Eric: Yeah, absolutely. We feel that way when we’re helping our customers, our business customers, or, you know, local communities. It’s always so rewarding. So it’s awesome to have a great partner like MPI and you and your team to kind of help us support our local businesses. But today we’re going to talk a little bit about tap and contactless payments. So why don’t we start? Let’s lay a baseline for everybody. What are tap and contactless payments?
Katie: Such a good question. So we’ve all been used to using our credit cards and businesses where traditionally we were swiping the cards in the machine or the merchant was swiping the card for us. And then we had that big transition where we went to EMV and we now have the debit and credit cards with the chip inside of it, and you dip it into the terminal. So a new way for us to process transactions is utilizing NFC. And NFC stands Near-Field Communication. And what that means is that it allows for communication to happen between two devices over a very short distance, such as four centimeters or less. And this allows for the cardholder, which is the customer of the business to use their cell phone or to use their card. And they can just about tap that piece of equipment and it allows the payment to process much like we did when we swiped the cards before or dip them in with the EMV chip.
Eric: Yeah, absolutely. So this is things like Apple Pay, Google Pay, Samsung Pay, all those kinds of things, or are there more options?
Katie; Yep. So there’s a variety of options out there. A lot of payment providers and software providers included have offered what’s called SoftPAY solutions. And Apple Pay, Google Pay, those are some of the biggest names out there. And in fact, you know, I know that on the last cell phone that I bought, setting up that SoftPAY experience was a part of setting up the phone itself. And so these software providers and app solutions have created SoftPAY or, you know, Soft Wallets really that allow you to store your card in a secure manner so that, you know, if you leave your wallet at home or if your wallet gets lost while you’re out, you’re able to use your phone at any time to process those transactions in a secure manner.
And it has really become, you know, a useful tool for cardholders while they’re out because what does everybody have in their hand? Their phone. Everybody has got their phone in their hand. And so having things like Apple Pay or Google Pay, you know, online there are purchase opportunities for you to use that stored information using that Soft Wallet. But when you’re out, you know, in the community at your local retailer, you don’t have to get your purse out. You don’t have to fumble for your wallet. You can just take your phone, tap the device, complete your purchase, and then continue about your day.
Eric: Right. And it even goes further. I think my watch wants me to set it up so I can use my watch instead of my phone. I mean, it’s, amazing the number of methods that people have at their disposal now to spend money and to send and receive money.
Katie: Absolutely. You know, and I even see it too where, you know, I have some younger nieces and nephews that are in high school and college. And, you know, they always have their phone and we’ll be at a store and they’ll want to pay for something. They don’t even reach for their wallet anymore. They don’t even know where it is half the time when you’re in the car with them but they know where that phone is. And, you know, giving cardholders the ability to utilize the technology that they’re using in their everyday life, whether it’s their smartwatch or smartphone, allowing them to utilize that so that their day is smooth and seamless is really important.
Eric: Right. I feel like, especially now over the last, you know, 12 months to 18 months because of the pandemic, contactless payment kind of became even more prevalent or more necessary, almost.
Katie: It really has become not just a topic of convenience, it has truly become a topic of safety. And if you look at the last 12 months, it has really pushed businesses and consumers about three years, I think, into the future in a very short amount of time. We’re more cognizant of the fact that we might not want to touch a pin pad on a terminal, which is a payment device that you would use in a gas station. We might not want to touch that right now because, you know, we’re more conscious of the fact that there are germs. And we don’t want to have to hand sanitize and we just don’t want to touch it.
So it has really I think forced businesses to take a look at their technology to make sure that they can give cardholders that experience. And cardholders have started to transition from this being just a matter of convenience to it might be a requirement where they might not feel comfortable handing their card over, and having to touch, you know, the pin pad associated with the transaction. It’s really important for… You know, I’ll be honest with you. So I’m in the payments industry. I’ve been in the payments industry for the last 15 years. And it took the pandemic to force me as a cardholder to start tapping my card. I was just, you know, a little old school and just dipped my card all the time. And this really forced [inaudible 00:08:57] utilize the technology centered around my smartphone and my card to start tapping it now. And it has been a very easy transition. And actually, I’m using it more often than dipping the card.
Eric: Yeah. Well, it’s habit, right? I mean, we do a thing so often it’s just second nature to reach into my pocket, pull my wallet out, grab the card, and swipe the card. That’s normal. So having an external force like a global pandemic to push you to use some different options is definitely something that like you said, it pushed the whole world forward in terms of how we do certain things like card usage. Talk to us a little bit, if you would, Katie, about security. I know I’ve heard, you know, scare tactics and things about stealing your information because, goodness, if you just need to be close, I can just swipe near you and steal your card information. How accurate is that? And what security precautions are in place to protect consumers and businesses that may be using these kind of payment methods?
Katie: Absolutely. And so there’s an element of uncertainty there, I think. And it’s been fostered by this fear of cardholder information, you know, whether you’re the consumer or the merchant being stolen or captured at the time of the sale. And I think one of the biggest reasons why folks should feel like this is secure is you’re not using your smartphone or your watch, and you’re not waving it from a foot away. That would leave some variance where folks intercept that. This is a physical space of four and a half centimeters or less. And so to navigate that space is going to be difficult as is.
So the ability for someone to intercept that information in that amount of space is near impossible. We can never say it’s impossible but it’s near impossible. Another thing to consider with the security of all of this is that the NFC-enabled terminal uses something called tokenization. And the process of tokenization is where cards are never truly stored in the application or anywhere in the operating system of these devices. It’s replaced with a token. And that’s a secret one-time use number that can’t be replicated or used later. I would say that you’re going to have more chances of having your credit card number stolen by someone using their phone over your shoulder to take a picture of the front of your credit card than you would even encounter by using your smart device over top of the terminal that’s at Starbucks for your coffee. There are so many layers of encryption that are involved with NFC payments and there are two-factor authentication processes and passcodes. And, you know, there’s so much security built into that SoftPAY experience, coupled with the communication with the terminal that it’s very, very unlikely that your card would be compromised from using, you know, an NFC enabled transaction.
Eric: And correct me if I’m wrong, we’re a little slow on the uptake on this in this country. I mean, we were one of the last countries to have this type of payment technology and EMV and NFC and that sort of thing. Is that accurate?
Katie: It’s very accurate. I remember attending a payments industry trade show the year before EMV rolled out. And one of the speakers there, I can’t remember his name but he was someone at American Express. One of their, you know, VP-level folks that works on global payment acceptance for American Express. And it shocked me because he said that we were like one of maybe five countries at that point that had not yet adopted EMV transactions. And so we were late to the game for EMV acceptance. And what that had done because the rest of the world had really bolstered themselves security-wise against fraudulent card activity it was pushing more fraudulent activity here, stateside, both online but also in-person. And so it really started to hurt businesses that are stateside simply because they became more susceptible to fraud. But yeah, we were very late in the game and that’s what led to a pretty quick adoption of EMV just to push everybody into a more secure payment experience.
Eric: It’s pretty wild. And so hopefully, all the recent adoption here in just even the last year and a half is really helping to improve security across the board within this country and for the businesses that we serve in our communities. So let’s talk a little bit about those merchants. Like why should a merchant even want to accept these payments? And how hard is it to set this kind of thing up?
Katie: So merchants are going to want to accept these payments because they want to give the customers that are coming to their establishment, they want to give them a secure and safe payment experience, and they want to give them convenience of use. We’ve all gone into a business where, you know, they don’t accept credit cards at all, or maybe the way that they’re accepting credit cards makes us as a cardholder nervous, just because we as cardholders have become more mindful of the ability for our information to be compromised.
So to accept payments in a safe and secure manner, from a security standpoint, it’s going to reiterate the fact that that customer made a good decision by coming into your establishment and doing business with you. For safety, you know, post-COVID, with the vaccines rolling out and maybe some restrictions easing right now for maybe the next few months or hopefully for the rest of time, you know, things are going to relax some. But I think that the last 12 months broke that muscle memory of merchants dipping or swiping their card because they were afraid that touching services was going to be a safety issue. So allowing for the convenience of a contactless payment experience might make some folks that, you know, have not yet participated in the vaccine or maybe are high risk and have folks in their family that are high risk.
And then I think the third reason that a merchant should really consider this is that, you know, cardholders at any age are changing their payment style and they’re utilizing technology more. You have grandparents that now have smartwatches that are using smart technology. You have teenagers that they might have an experience in 10 years where they don’t even have a physical card. They just use everything on their phone. So I think that adapting to the technology and making it as easy as possible for consumers to spend money in your establishment is a great idea. Any payment providers should be only deploying equipment that allows for EMV processing of transactions. And for the most part, the manufacturers of these payment devices have NFC built into it. So if you have considered changing your current merchant services provider, if you go with a new provider and get new equipment, or you’ve gotten new equipment in the last two years, chances are that you’re going to be outfitted with something that’s going to allow you to have NFC processing.
Eric: Maybe we have listeners who have a shop and they don’t have some of these in place. What hurdles do they have to jump through? You know, it might be a scary undertaking for them to think, “I’ve never had this. Now I need to add all of this technology.” What does that process look like?
Katie: Well, what’s really great about it is that you know, any of these payment devices, they’re going to be similar to what we’ve been using for the last five or 10 years. At some point in the last 10 years, any merchant, no matter how old their relationship is with their provider would have had to update their equipment, or they would have been subject to fines or fees. This is simply with existing equipment that has NFC capability. This is just educating yourself on how the cardholder interacts with the payment device. Your provider should be able to give you that information. If you’re signing up for a new merchant services account, make sure you ask about the payment device that you’re being supplied with. Ask them to run you through how to process an NFC transaction. And I think that you know, it sounds much harder than it really is. And it is a change in technology which can be intimidating, but it’s being done on payment devices that for the most part, haven’t changed too much over the last two or three years. You might have this capability and just have never used it because you didn’t think about it. So I think that going to your current provider and having them educate you on if your current technology allows for these payments, having them walk you through how to process a contactless payment. And if you don’t have the capability, asking for it so that you can give that to your customers.
Eric: Exactly. Katie, I really appreciate you joining me today. Do you have any final thoughts to wrap up this topic of tap and contactless payments?
Katie: Thank you for having me. It’s always my pleasure to, you know, help educate the small businesses and merchants in our community to know that, you know, processing payments is important. It helps build your business and it helps your customers feel safe when they’re processing their cards with you. It’s just so important to look at how you’re processing now and you know, is the technology that you’re using the right technology for your business. And, you know, in the last 12 months, we’ve gone through a lot of change really quick. And I think we’ve proven while sometimes it feels a little uncomfortable, we can get through it, and maybe change isn’t a bad thing.
Eric: Absolutely. Katie, thank you again. I really appreciate you joining me. It’s been a pleasure talking with you. If any of our listeners have questions or want to learn more, the best way that they can get the support they need is to go to mybank.com. Find a local representative in your area. One of our locations, a person that can help you with your business. They’ll get you in touch with MPI or be able to discuss the needs that you have and find a solution that fits best for you. So, Katie, once again, thank you so much.
Katie: Thank you.
Eric: Well, that brings us to the end of our show. You can always find more episodes by visiting mybank.com/podcast or find us on your favorite podcast app. You can also always leave feedback, ask questions, or request the topic for us to discuss by sending an email to firstname.lastname@example.org. We’re thankful for you to be listening. We’ll be back next week with more helpful content but until then, we wish you the best in focusing on what matters most to you.
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