A win-win situation: how cardless transactions are enabling small businesses and delighting customers

Think about the last time you left the house… what did you take with you? Your keys? Your phone? But what about your wallet?

10 years ago, it was unlikely to leave home without a payment card of some sort. Yet now, thanks to technology such as tokenisation – pioneered by Visa – more and more of us are leaving our wallets at home whilst still feeling financially safe and secure.

Of course, credit and debit cards aren’t the first everyday item to evolve through technology. The letter became the fax, the fax became the email, the email became the instant message – in fact, everything from our rolodex (if you’re old enough to remember) to our calendar… to our car keys has been digitised, miniaturised, and placed in our pockets.

But as this technology advances, and more and more payments are processed without a physical card present, there is one part of the process that will never be digitised… you.

Because in the absence of a card, the security of transactions relies on you – what you know (such as a password or PIN), what you own (such as a phone or watch) and what you are (your biometrics).

Cardless or “Card-not-present” transactions are becoming part of our everyday lives. Whether we’re using a smartphone to buy clothes on the high street, shopping for groceries online, paying for our favourite streaming service, or even instructing a smart speaker to purchase something for us, we’re using the technology without giving it a second thought. And as consumers make payments without a physical card part of their everyday lives, businesses that aren’t geared up for these types of transactions could be missing a trick.

Online fraud is falling, and the barriers are coming down

Yet some small business owners still feel uncertain about accepting these digital payments, with physical card transactions generally considered safer and more secure. While not entirely unfounded, secure digital payment solutions such as tokenisation and address verification services greatly reduce the risks.

Of course, digital payments without a physical card present aren’t completely infallible. As with any transaction, digital or otherwise, there’s a chance of interference from fraudsters and bad actors. While fraud is higher where the card isn’t present than other forms of credit or debit card fraud, the gap between the two is far smaller than many consumers and business owners believe. Plus, it’s narrowing all the time. In fact, in the UK between 2018 and 2019, instances of fraud without a physical card fell by as much as 7%, with online fraud against UK retailers representing less than 0.03% of total debit and credit card spend .

Although online fraud and cybercrime present a very real threat, with the right payment protocols, such as tokenisation and multi-factor authentication, a lot can be done to mitigate the risks associated with card-not-present transactions. Protecting businesses and customers from online fraud should always be a key priority, but it should never be a barrier to new opportunities, particularly when those opportunities can potentially help businesses grow significantly.

In today’s fast-moving digital marketplace, the benefits of adopting digital payments far outstrip potential risks.