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3 Trends that Prove the Future of Retail Is Contactless Payments

3 Trends that Prove the Future of Retail Is Contactless Payments
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  • 3 Trends that Prove the Future of Retail Is Contactless Payments

Consumers’ Pandemic-Related Aversion to Cash and Coins has Fundamentally Shifted Global Payment Preferences

According to Rapyd’s research, in 2020, consumers formed new preferences for payment methods that don’t make them touch card readers, manually key PINs, touch device screens, or even exit their vehicles. As a result, contactless payments are booming.

Rapyd’s 2020 Survey Found:

  • More than half of consumers are now concerned about handling notes and coins
  • 60% plan on using online and contactless payments instead of physical currency
  • Almost a third would be open to retiring notes and coins from use

Contactless payment methods have been evolving. Innovative retailers are rolling out frictionless payment methods that redefine the consumer experience and create new possibilities for faster and safer commerce.

Here’s What the Future Has in-Store for Contactless Payments

Around the world, cities are letting commuters pay for street parking using tap and go. You can now pay for fast food using facial identification, and in-car payment systems are enabling shoppers to make purchases without even leaving their vehicles.

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1. Taps Replace Swipes and Phones Replace Wallets

Tap-and-go card payments at grocery stores and pharmacies grew twice as fast as non-contactless transactions globally and 2.5 times faster in Asia Pacific between March 2019 and 2020, according to Mastercard.

The payment trend hasn’t gone unnoticed by other financial services giants. Visa is investing in the shift, by rolling out a ‘tap-to-phone’ function for Android smartphones, to allow merchants and micro-businesses to turn their phones into contactless POS terminals.

2. Facial ID and Biometrics and Removing the Need for Physical Payments

In California, a fried chicken restaurant chain has turned to contactless payments to speed up its ordering process, while protecting its customers from COVID. Working with PopID and Datacap Systems, Daddy’s Chicken is using kiosks enabled with facial ID technology to help customers easily pay and redeem loyalty points across its locations.

3. Voice Assistants Are Enabling In-Car Payment Options

Soon you may be making more payments in your car, with your car. In-vehicle payments will reach $86 billion in 2025, up from $543 million in 2020. (Juniper Research) In a September report, Juniper pointed to a payments collaboration between Visa and Honda and predicted increasing integration of voice assistants in vehicles will boost adoption of in-car payments. For now, the novelty factor remains with most in-car payments going towards refueling and electric vehicle recharging.

Are Contactless Payments Right for You?

If you’re a digital product leader or finance executive, these developments may give you plenty to consider. Yes, contactless payments are transforming commerce — but financial product developers need to offer the right payment mix for their customers and use cases. Bear in mind these pros and cons if you’re considering rolling out contactless payments or developing a contactless solution of your own.

Contactless Payments: Advantages and Disadvantages

Advantages of Contactless Payments Disadvantages of Contactless Payments
Faster payments lower checkout times and reduce lines Lower transaction limits
Safe and secure for customers Still not widely used
Less friction during purchase process Older consumers may prefer contact payments
High standard of fraud protection from issuers Some methods not be possible with all smartphones

Contactless Payments Will Revolutionize the Way We Buy and Sell

One thing is certain. Contactless payments are here to stay, and the market is set to more than double in size from $8.3 billion to $19.3 billion by 2026. (Valuates Reports) With their ability to support pandemic-friendly transactions, make low-value purchases easier, and support revenue, contactless payments could become a must-have for companies everywhere even faster than analysts are predicting.

 

Sources

Mastercard. “Mastercard study shows consumers moving to contactless payments for everyday purchases as they seek cleaner, touch-free options.” www.mastercard.com, 29 April 2020, https://newsroom.mastercard.com/asia-pacific/press-releases/mastercard-study-shows-consumers-moving-to-contactless-payments-for-everyday-purchases-as-they-seek-cleaner-touch-free-options/

Juniper Research. “In-Vehicle Payments 2020-2025 Market Survey.” www.juniperresearch.com, https://www.juniperresearch.com/resources/infographics/in-vehicle-payments-statistics.

Valuates Reports. “Contactless Payments Market Size to Reach USD 19.3 Billion by 2026 – Valuates Reports.” prnewswire.com, 04 Aug 2020, https://www.prnewswire.com/news-releases/contactless-payments-market-size-to-reach-usd-19-3-billion-by-2026—valuates-reports-301105482.html.

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