Once touted the future, the adoption of contactless payment has been slow. The familiar swipe, dip, PIN-entry and signature route has been preferred by consumers. But the Covid-19 pandemic has made consumers conscious of what they touch. Hands can transfer deadly virus to the eyes, nose and mouth, In the midst of the Covid-19 pandemic, contactless payments is potentially a life-saving technology.
Contactless payment technology is based on RFID (Radio-frequency identification) or NFC (Near Field Communication). Instead of touching a merchant’s point-of-sale (POS) equipment and PIN-pads, contactless payment allows customers to wave their payment method close to a payment reader.
One of the major advantages of contactless payments is the speed at which transactions occur, making it an efficient payment choice. With increasing integration of contactless payment technologies in smartphones, the demand for such solutions is rising exponentially. As per the highlights of one report, the global contactless payment market size is expected to grow to $18 billion by 2025.[1]
Benefits of contactless payments
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- Speed tops the long list of benefits that contactless payment offers. It is estimated that such payments can be done within 15 seconds. The vast improvement to payment processing will hugely benefit the retail industry. As a PIN is not required, transactions take place with just a tap. This would lead to lesser number of staff behind tills and smaller queues. The tap-and-go technology would also help in containing the spread of viruses.
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- The risk of fraudulent activities is minimised with contactless payment solutions. Contactless payment cards have built-in protection to ensure that the same transaction does not happen twice. In addition, the new service technology of tokenisation adds an extra level of security to sensitive card details. The process replaces sensitive data with an algorithmically created ‘token’ which is used for transactions.
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- With digitization affecting all parts of life, transactions should take a back seat. Your NFC-enabled smartphone or your contactless card is all you need to make purchases on the go. The need to carry cash in bulk would soon be a thing of past.
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- Successful businesses focus on improving customer experience and contactless payments will help them do just that. These payment solutions are ideal for restaurants and the traditional bricks-and-mortar stores where contactless transactions will reduce time as well as queues. In addition, businesses who adopt contactless payments are viewed as keeping in sync with current technology. This aids in enhancing customer loyalty.
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- Businesses accepting contactless transactions won’t be stuck with additional fees. Since such payment systems have the same costs as regular card transactions, more enterprises will be encouraged to embrace this technology.
Going contactless in the post-Covid world
In March 2020, the World Health Organisation (WHO) warned that bank notes may be carriers of the coronavirus.[2] In this backdrop, businesses and bank branches have pushed for larger adoption of contactless payment solutions to minimize the risk of infection, however small it may be.
A study by MasterCard highlighted the impact on point-of-sale credit card transactions.[3] The company polled 17,000 consumers in 19 countries and found that most respondents perceived contactless payments as the “cleaner way to pay”. 74% of the respondents predicted they will keep using contactless payment methods. The prediction and sentiments show the changing picture of transaction experience as we move forward.
With reduced time, minimised scope of fraud and convenience coupled with the changing dynamics of the current time provides a fertile ground for contactless technology to take off.
[1] https://www.businesswire.com/news/home/20200330005477/en/Future-Contactless-Payment-Industry-2020-2025-Rising-Demand
[2] https://www.telegraph.co.uk/news/2020/03/02/exclusive-dirty-banknotes-may-spreading-coronavirus-world-health/
[3] https://westfaironline.com/124189/mastercard-survey-finds-global-spike-in-contactless-payments/