Contactless payment took off in 2020 during the COVID-19 pandemic. It looks to be maintaining its momentum for the future. According to a study by Visa, just 16% of consumers said they would revert to traditional methods of payment after the pandemic. Also, 65% of consumers said they’d prefer to use contactless technologies after a vaccine is available.1
Among small to medium businesses, just 20% offered contactless payments for the first time by June 2020. This increased to 39% in 2021, while 74% of them surveyed believe that consumers will continue to prefer contactless options. Shoppers have become more safety-conscious; in fact, 47% reported they would not shop at a store that didn’t use contactless systems.1
What Are Contactless Payments?
In the past, we handed over cash and swiped credit cards in machines. Today, contactless payment technology allows us to tap a payment card or device near a terminal via radio frequency identification (RFID) or near-field communication (NFC) technology. Consumers can use a debit or credit card, smartcard, or smartphone or another device (smartwatch, fitness tracker, etc.) to complete a transaction. They don’t have to enter a PIN, sign for the transaction, or swipe their card.
Benefits of Contactless Payments
The technology was introduced in the 1990s but few merchants and retailers caught on at the time. Now, banks, creditors, and merchants throughout the world use contactless payments. These have been most popular in Australia, Canada, the United Kingdom, and South Korea. Up until the coronavirus pandemic, the U.S. had been slow to adopt the technology, but, to both merchants and consumers, the benefits are becoming clearer.
Benefits to Merchants
For businesses, contactless payment options:
- Improve Efficiency: Contactless reduces demand on the workforce and reduces the reliance on card machines; it’s not necessary to count cash, so your processes become more efficient.
- Same Transaction Fees: You pay the same per-transaction fee as with a regular credit card, so there are no extra costs or processing fees to worry about.
- Faster Checkout: The checkout experience is smoother and faster, so customers are more likely to remain loyal, and you can process more transactions in a shorter period of time.
- Fraud Protection: Encryption and other security measures help deter hacking. Contactless payments are generally protected against fraud, and you’re likely to experience fewer disputes and receive your funds faster.
Benefits to the Consumer
Consumers are catching on because contactless technology affords benefits such as:
- Convenience: There’s no need to handle or count cash, enter a PIN code, or wait for the transaction to be processed. Purchases can be made faster and checkout lines are shorter.
- Safety: Chip cards offer fraud protection using encryption and other methods. They cut down the risk of identity theft, as it’s harder to intercept and steal data transmitted from a contactless payment
- Less Bulk: Consumers don’t need a wallet full of cash or credit cards. If their smartphone is NFC-enabled, that’s all they need to make a purchase.
- Access to Loyalty Programs: Discounts and loyalty points can be automatically communicated to a smartphone or another device; there are also banks offering cashback incentives for those who go contactless.
Retailers and consumers have embraced the benefits, but there are limitations. To make a contactless payment, a customer must have a smartphone or device that supports the technology. Mobile payment devices may not work internationally, while a mobile wallet may not be accepted in a different country despite similar technology being used. If accepted, foreign transaction fees may apply. Another limitation will be customers who are wary of using a tap-to-pay system because they are unfamiliar with it.
In addition, transaction sizes are often limited. Contactless transaction limits vary from country to country and from one bank to another. Merchants and retailers may set their own limits. Others might permit larger transactions but require a signature for approval.
Future of Contactless
The United States is starting to catch up with other countries that have adopted contactless payment technology much faster. It is quicker, easier, and more secure. Consumers have come to prefer this method and there are now many payment methods available from financial institutions and other companies, including Google, Apple, and Samsung.
In 2020, Forbes predicted that contactless payments would overtake cash and traditional credit cards as a cleaner, safer alternative, in a span of three to five years.2 It also predicted point-of-sale hardware to adapt to process payments without having to insert or swipe a card. Along with this prediction was an anticipation that financing platforms would no longer require paperwork or touchscreen signing, instead leaning toward digital point-of-sale platforms in which preapproved offers from multiple lenders could be delivered.
A third Forbes prediction was that mobile wallets will replace the physical wallets we’re all used to carrying. There were robust predictions before the pandemic. However, touchless payment technology presents a challenge to those who do not have a bank account or a credit or debit card.
If you do, and you possess a smart device equipped with the right technology, you can make purchases wherever no-touch payments are accepted.
How to Start Offering Contactless Payments Today
It’s easier than ever to get set up with mobile payment processing technology. Adept Payments offers a mobile payment service so merchants can process transactions via consumers’ smartphones, tablets, and other mobile devices. A credit card reader can be included if needed. If your business is looking to offer more flexibility, we can also include a mobile app (via a virtual terminal), so that you can support:
- Contactless payments via NFC-enabled card readers
- Magnetic readers that convert a POS device into a credit card reading system
- Mobile payment authorization with QR code scanning
- Mobile bank transfer or text message payments
Adept Payments also offers custom solutions for businesses, including brick-and-mortar stores and online-only merchants. We can help expand your flexibility in supporting all mobile payment methods. Plus, we incorporate data tracking so you can make smarter business decisions, data security, and full merchant support, including answers to your every question.
Our mission is to provide a trustworthy, reliable contactless payment solution with the lowest possible costs and fees. We also support major credit and debit cards, as well as mobile wallets. Additionally, we help set up your system fast, saving time and allowing your business to grow.
For more information, contact Adept Payments today at 888-732-3838.