|June 25th, 2020|
The payments industry has come very far in terms of implementation of disruptive technologies. In the last decade, this progress has been nothing short of extraordinary. With groundbreaking financial technologies and the willingness of merchants to experiment and implement new and more efficient methods of payment, the future looks promising. It is estimated that in the next 5 years, 53% of all global payments will become contactless. Digital payments have replaced cash transactions up to a large extent and now the future is headed towards contactless mode of payments.
Contactless payments is one of the latest additions in the payments industry. It works on technologies like NFC (Near Field Communication) or RFID (Radio Frequency Identification) which facilitate seamless contactless payments without requiring you to swipe your card, enter a pin or sign a receipt. Payments can be made via phone, smart watches, smart key fobs, rings and health bands etc. These payments are already becoming popular among consumers for several reasons. There are other ways of paying without contact like digital banking or mobile wallets. Several companies have also introduced their own wallets to facilitate payments.
Benefits of contactless payments:
1. Speed & Agility
Contactless payments are relatively fast as compared to normal debit/credit card transactions. They take merely 15 seconds to process, which is half of the time taken for normal card transactions. Since there is a whole lot less processing required, business owners can aim to improve the turnover as there is a low chance of queues building up at the payment counters. These transactions merely need a tap on the reader, no pin is needed which makes the process much much faster and efficient. Thus, the number of staff behind payment counters can be reduced, as no cash register handlers are required. This staff can be reassigned on the floor to improve sales, customer service and shopping experience.
2. Safe & Secure
In case your card is lost or stolen, you can simply report it to your bank and block it immediately to stop any further transactions from your card. You can also ask your bank to disregard/nullify or amend any fraudulent or discrepant transactions. There is more chance of fraud in contactless payments as the user does not enter a PIN or password. However, built in protection measures ensure that the same transaction does not get repeated and to safeguard sensitive data transfer during payments. NFC uses data encryption to secure the transmission of sensitive information.
3. Effortless & Error Free
When it comes to contactless payment systems, they are really effortless in the truest sense. These payments aren’t just restricted to dipping or tapping of cards but can also be completed via mobile phones. With NFC technology payments can be made with mobile phones just by placing them near the point of sale device.
NFC technology embedded in the smart readers can read payment information from a distance from smartphones or smart wearable devices like watches, rings, key fobs etc. Contactless payments can be made from the card inside the wallets without removing the card, just by dipping your wallet over the smart devices. No more worrying about forgetting your pin or entering the wrong pin several times and accidentally blocking your card.
4. Customer Experience
With faster, secure and effortless transactions, shops can expect more sales as waiting time reduces drastically, and queues are a lot less likely to build up. This also reduces the number of abandoned sales as payments become easier for customers. Average transaction value (ATV) is also increased when the customer doesn’t have to carry around cash and the payment process becomes efficient. For most contactless transactions, verification is not needed and the requirement of printing out a receipt is also not an obligation as such until the customer asks for it or if the transaction is of a high value/amount. This saves a lot of time for the customer as well as business owners.
5. Better Brand Positioning
Not just a great customer experience, but businesses can also offer value added services and thus get ahead of their competition. With fancy contactless payments like ‘metal cards’ businesses can aim to target more wealthy and VIP clientele. Optimization of loyalty programs for customers can also be included to popularize contactless payments.
Fintech is rolling in new surprises every few months. Contactless payments have been around for quite some time now, however consumers have refrained from them due to several concerns regarding availability, trust and safety. As this technology progresses, all these issues are being fixed and the process is being made more consumer friendly. Although there are only a few merchants with this kind of capability and losing your card could be a threat but there are security systems in place for that. As customers we ought to drop the skepticism and embrace the future as it will soon catch up.