7 min read

Top 3 contactless payments myths that payment processors should debunk for retailers


In the US, a majority of all transactions at brick-and-mortar stores continue to be driven by cash. The enduring preference for the physical dollar, even during a pandemic, is an anomaly in an increasingly digital world.

The 2020 American Express Digital Payments Trendex survey of merchants found that 84% agree that using contactless is safer than using cash, swiping a card or inserting a chip card. And yet, cash remains the preferred mode of payment for many businesses. This status quo mostly boils down to people’s risk tolerance and the customer experience retailers need to provide to accommodate their preferences.

Payment merchants, therefore, need to address these underlying reasons for which retailers are encouraging cash payments. From the retailers’ perspective, the prospect of losing credit and debit cards, the perceived possibility of security breaches, and the chances of incurring hidden fees trump the convenience and safety assured by contactless payment options. This combined with the various challenges at the retailer level, which are substantial and need urgent remediation, is prohibiting the adoption of contactless payments and the many benefits it offers.

Payment processors are already providing if not currently building seamless integration capabilities enabling retail merchants to accept contactless payments. However, the success of adoption is driven by the confidence of the merchants in using them. We believe it is the responsibility of the payment processors to debunk these myths about contactless payments that retail merchants have from a technology and financial point of view. Let’s take a deep dive into the top three myths that merchants have to debunk for retailers vis-a-vis contactless payments to help increase adoption.

Myth 1: The perception that contactless is not secure

Why invest in contactless payment infrastructure when your customers think it is not secure? For merchants, this means there is little incentive to adopt contactless payments.

This common lack of awareness cannot be further from the truth. Banks and payment processors have significantly upgraded the security of contactless payments. Any and all transactions through tap-and-go cards, wearables and mobile don’t require the exchange of the cardholder’s name, security code, secret pin, and billing information. Instead, it uses tokenization, encryption, and one-time-only codes to complete the transaction at close proximity. On the back-end, there are robust fraud detection algorithms to stop suspicious activity.

On top of this, obtaining a terminal that can process contactless payments can only be done by legitimate businesses. The rigor of the Know Your Customer (KYC) process means that the visibility of who is using the machine and where is clear and, therefore, the chances of fraud are almost nil.

Myth 2: High processing fees

The sense that transaction fees retailers have to pay when customers use a contactless option is higher also plays a significant hurdle in adoption.

In reality, the average credit card processing fee for a point-of-sale transaction is 1.5% – 2.9% and 3.5% if it is online (due to higher fraud risk). Additionally, processors do not levy any extra processing fees for contactless payments. Moreover, the cost of businesses supporting contactless payments is lower than the cost of handling cash. Not only do customers spend more when using electronic payments, but it is also much safer for the retailer because it brings the risk of theft to zero.

Myth 3: Low payment limits

While it was true that many banks had put low limits on the amount that can be paid via contactless payments, it is no longer the case.

COVID-19 has significantly intensified the need for safer payment options and, consequently, the use of contactless payments has skyrocketed. Seventy-eight percent of consumers now consider contactless to be their preferred method of payment. This has forced banks to increase the limits of contactless transactions. In 2020, Mastercard and Visa raised the contactless payment limit in Canada from $100 to $250.

These are some of the myths that have cropped up in the public consciousness regarding the use of contactless payments and have stalled their wider adoption. But awareness and education will pave the way for more retailers to embrace contactless payment options. The benefits are too many, its disadvantages are almost nonexistent, and the return on investment is too high for businesses to not consider contactless payments.


As we continue to live the new normal and navigate the post-COVID world, there’s little doubt that the adoption of contactless payments is only going to increase. This technology is going to be the preferred mode of payment for customers across industries. In order for businesses to stay relevant and provide a satisfactory customer experience, they must embrace the change. Relevantz can help you leverage the benefits of contactless payment technology for your retail merchant customers. Our services are designed with our market-proven understanding of the latest technologies, applications, infrastructure, security, operations, industry domains, and human-centric design to mitigate transformation risks as you build for the future.