MST Payments: What Merchants Need to Know About Magnetic Secure Transmission
It’s the beginning of a new age… of contactless payments. The global payments market is expected to reach $2.23 trillion in transaction value in the next five years.
Contactless payment platforms are quickly becoming the most-used payment option worldwide, and the payments market is rife with contactless options––Apple Pay, the failed Google Wallet, LoopPay, Android Pay, and so on.
Why? Because contactless payments save customers valuable time during the purchasing process, which means they have less of an opportunity to reevaluate their impulse purchases before checking out at your cash wrap stand. They’re also more secure than traditional swipe payments or even EMV payments.
Contactless payments have already caught on in a big way in Asia, Europe, and Australia (over 94% of payments in Australia are already contactless), and they’re set to take over the U.S. payments industry next. It’s just a matter of time before contactless payments usurp traditional payment methods in the U.S.
MST Payments are a type of contactless payment and, if you’re still operating with an old magstripe card reader, they might be the cheapest and most convenient contactless payment option for your business.
So, with no more ado, let’s take a look at the ins and outs of MST payments, how they compare to other contactless payment options, and whether you should implement them in your store.
What exactly are MST Payments?
Contactless payments can be divided into two categories, NFC (Near Field Communication) payments and MST (or Magnetic Secure Transmission) payments. The beauty of MST payments is that they don’t require any additional hardware––they work with good ‘ole fashioned magstripe readers.
Customers can use MST Payments anywhere they’d normally swipe a card. NFC Payments do require separate hardware and MST Payments are often lumped together with them since they’re both mainstream and contactless, so retailers are often pleasantly surprised to realize that they already have the magstripe reader necessary to support MST mobile payments.
Samsung Pay is the big name in MST payment right now. Samsung bought LoopPay in 2015 and brought MST Payment into the mainstream in the process. MST Payments are the chameleons of the payment industry, since they work with traditional card readers. The only technology that doesn’t normally jibe with MST payments are certain handheld POS stations and ATM machines that take customers’ cards for EMV processing, but don’t actually have a magstripe reader. Since MST works with old school swipe card readers, it doesn’t work with terminals that are only optimized for chip.
You don’t even necessarily need a Samsung phone to use Samsung Pay, just one that’s compatible with the app. Unfortunately, that doesn’t include Apple devices (since Apple already has their own payments thing going on with Apple Pay and wasn’t too keen on the idea of optimizing their smartphones to be compatible with the competition).
How does the technology work?
MST Payments share data through magnetic signals that communicate between your customers’ smartphone and your credit card reader. It works just like a magstripe reader, without the swipe. The customer’s smartphone just has to be logged into their payment app and held within a few inches of your magstripe card reader to transmit their tokenized payment data to your terminal.
This method of payment is way more secure than traditional swipe or EMV terminals, and it reduces the risk of hackers stealing your customers’ payment data when their card is exposed. To see if your magstripe reader is already MST-enabled, just download the Samsung Pay app on your smartphone and give it a whirl on your magstripe reader.
Which businesses can benefit from MST Payments?
Any business that uses a traditional magstripe reader can increase customer satisfaction and security by implementing MST payment options.
However, since customers need both a smartphone and an MST-enabled app to enable this type of payment, MST Payments are most effective in developed areas with broad smartphone adoption.
Statista reports that 72.2% of U.S. customers have smartphones in 2020 and this number is on the rise. You know your customers best and, if most of them don’t have smartphones yet, you may still be able to wait a while before adopting contactless payments.
Since MST payments work with old swipe card readers, however, there’s really no reason to delay confirming that your card reader works with MST payment apps.
How can merchants support MST?
Just give it the ole checkeroo with the Samsung Pay app and a card reader.
Samsung Pay is now compatible with Chase bank accounts, so more customers will be asking if your business supports it in the near future.
To optimize your business for MST payments, you’ll want to be sure that your checkout cashiers know that your business supports MST payment features and ensure that they know how to process MST payments on your card reader.
If you haven’t given your checkout cashiers and store associates the lowdown yet, a training session on MST payment processing may be in order.
MST vs NFC Mobile Payments
Like we discussed earlier, MST and NFC are often confused since they’re the two most prevalent forms of contactless payments. But there are a few key differences that set NFC payments apart.
NFC payment options, like Apple Pay and Android Pay, use shortwave electromagnetic induction to communicate stored payment data from your customer’s smartphone to your card reader.
So, your customers can just swipe it at your cash wrap like with MST. However, unlike MST Payments, NFC mobile payments require you to get separate hardware to process them. If it weren’t for Apple getting a bunch of merchants to preorder the hardware before they launched Apple Pay, there’s no way that NFC payments would be as widely adopted as they are today.
Bringing it all together
Cart abandonment is a serious problem for modern retailers. Consider that 96% of shoppers leave stores empty-handed, 51.3% of which leave because the checkout lines are too long.
To prevent this from happening in your stores and to drive repeat business, you must strive to eliminate any friction points that may deter their customers along their path-to-purchase.
Contactless payments help eliminate unnecessary line wait times by speeding up the checkout process. They make the payment process more secure and, if global payment trends are any indicator, they will soon usurp EMV payments as the most-used payment option in the United States, as well.
Since you can start accepting MST Payments on your old magstripe reader, accepting MST Payments is more convenient than accepting NFC-enabled options such as Apple Pay for your business. However, due to the fact that Apple Pay and Android Pay are also widely-used payment platforms, you’ll also want to order NFC-enabled hardware so you can process all customer transactions in your store. After all, it’s your job as a retailer to make buying from your store as frictionless a journey as possible.
If you’re looking for additional ways to protect your business and to pass savings on to your customers, Payment Depot saves merchants up to 40% on credit card processing. Click here to learn how to start your 90-day risk-free trial with Payment Depot today.