How Contactless Became the New Norm Overnight?

Contactless is much more than cashless

Cashless payments have been a growing trend for years. If up until recently cashless payments were a moderately growing trend, contactless has now become the new norm overnight. It is no longer ‘nice to have’. It is ‘must have’. The demand is immediate and acute. SMB’s have taken a major hit as a result of the Pandemic. With so many businesses struggling to reopen or remain afloat, contactless payments are no longer just a convenience. They have become a necessity.

  • Nearly two thirds — 63% — of consumers globally would switch to a provider that installed contactless payment capability over an existing relationship.
  • 48% of consumers say they won’t shop at stores that offer only payment methods that require contact with a cashier or a shared surface like a POS terminal.

This situation has led retailers to reevaluate their POS checkout experience since customer expectations for a safe, touchless payment experience have made it critical for survival. IDC research shows that consumers have reduced their use of physical currency to half of what it was before the pandemic.

Unquestionably, adopting contactless payment options are going to be crucial for many businesses. Since contactless payments deliver health safety, increased convenience, reduced transaction time and better security & privacy, they have become the new de-facto standard. 73% say digital payments are the new normal for going forward.

  • Retailers have reported that cashless payments have increased revenue by 30%!
  • 81% say digital payments have improved customer satisfaction levels.

The adoption of contactless payments need not be an overly complicated operation, provided you select the right vendors to partner with. The easy path to success is to choose a company that has long-term technological expertise in NFC technologies and the hardware and software expertise to tie the whole eco-system together seamlessly.


The situation on the ground

A global study by Visa found that 67% of small businesses have adopted new behaviors to adjust to covid-19. A Mastercard study of small businesses across America, showed 76% saying that the pandemic prompted them to become more digital. Mobile payments at Points of Sale are already supported by 37% of global merchants surveyed, and 31.4% plan to add or expand this feature.

According to a study of consumers and SMBs, nearly eight in ten consumers worldwide have changed how they pay in order to reduce contact. 12% have ditched cash completely! One in five consumers have made a contactless payment for the first time during the pandemic.

  • 57% said they would continue using contactless payments post-pandemic.
  • Nearly nine in ten (88%) of Americans that adopted contactless thought the process was relatively easy.


Health concerns driving adoption

The increased adoption of contactless payments is due in part to the numerous concerns over the cleanliness of signing at point of sale (POS) or paying with cash.

For nearly half of global consumers (46%), using contactless payment methods is among the most important safety measures for stores to follow. Nearly half (48%) would not shop at a store that only offers payment methods that require contact with a cashier or a shared device.

  • 50% worry about the cleanliness of signature touchpads
  • 72% prefer to skip signatures altogether!

On top of that, consumers are actively cleaning their cards. 67% say they are taking some measure to keep their payment cards clean. 33% disinfect them and 22% wipe their cards on a shirt or cloth. This is a trend that is growing around the world.


Security concerns holding it back

Research from Simon-Kucher & Partners, shows 40% of US consumers don’t use mobile payments due to security concerns.

Research by Pew found that only 22% of US consumers described mobile payments as “well protected”.

89% of US consumers prefer to pay by cash, credit card or debit card.


Forecast for the future

The estimates of the global contactless payments market size differ among the various research institutes, but all report exponential growth.

  • Allied Market Research says it is expected to reach at $27.23 billion by 2023, with a CAGR of 20.8% from 2017 to 2023.
  • Juniper Research reports that contactless payments will triple to $6 trillion worldwide by 2024, from about $2 trillion this year.
  • According to IMARC, the forecasted global mobile payment market size by 2024 is expected to be $3,081 Billion, a huge increase from the $1,146 Billion in 2019.
  • According to Mordor Intelligence, the use of mobile payments is set to rise with a compound annual growth rate of 26.93% between 2020 – 2025 and overtake cash and credit cards.
  • The total transaction value of worldwide digital payments is expected to have an annual growth rate of 12.8%.
  • Global use of mobile payments at Point of Sale is expected to reach 28% in 2022. (Worldpay).

Some research data suggests that the U.S. market has recently converted most terminals from magnetic stripe to EMV. While many of the newer EMV enabled point-of-sale terminals in use are compatible with contactless card payments, it is extremely important to select the kind of vendor who can serve all your needs under one roof including any additional hardware components, software installations,  updates and EMV certification. This can save a lot of time and integration hassles.

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