Growing Demand for Contactless Payment to Significantly Increase Revenues Through 2026
The contactless payments are exploding in popularity all across the globe owing to growing acceptance of consumers and easy-to-use feature. A near field communication (NFC) technology is utilized by contactless payments to allow communication between two electronic devices. In NFC data can be transmitted over radio as it is a short-range wireless communication system. With NFC technology the data is transmitted only if the two devices are in a close range to each other. Contactless payment is an easy and convenient alternative of cash payment in which the customer can make payments using chip cards such as credit, debit, or smartcard.
There are two main types of contactless payments:
Contactless Cards
These cards are debit or credit cards that allows transmission of payment data because of an antenna embedded in the card.
Mobile Wallets
Mobile wallets are apps, like Apple Pay or Google Pay, in which consumers can store their card information. During checkout, the consumer opens the app and by just tapping the mobile device on the card reader completes the payment.
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The Benefits of Contactless Payments
Contactless payment brings customers and merchants alike a number of benefits:
Faster Checkout Process
Contactless payment is simply tapped on the card reader, and there is no need for the cardholder to enter a PIN.
Enhanced Security
An EMV card chip technology is utilized by contactless payments utilize, which is considered to be more secure as compared to the magnetic stripe transactions. As per Research Dive analyst review, contactless payments do not transmit the cardholder’s security code or name, which makes it tougher for fraudsters to make unlicensed purchases by interrupting contactless card data.
However, it should be noted that the mobile wallets offer an added layer of security in which the cardholder on their device has to enter the password to open their mobile wallet.
Capable of Connecting to Customer Loyalty Programs
Mobile wallets can be easily linked to loyalty programs and rewards, which is increasingly preferred by the consumer. As per a recent survey, it is revealed that about 63% of the consumers prefer to use payment methods that offer rewards.
Contactless V/s Cashless Payment
Mostly people take contactless and cashless payment as interchangeable terms. But there is lot of difference between contactless payment and cashless payment.
Contactless payments are those where credit cards or debit cards that either use RFID or NFC technology. In contactless payment, no signature or PIN for card is required to complete the payment. Thus, contactless payment is also called as “simply tap and go”. One needs not to do inserting or swiping the card in any ATM or POS machine. Just tap the card on the card reader and the payment is complete.
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A cashless method can be defined as any type of payment that is made without using cash. The examples are bank transfers, credit card payments, debit card payments, digital wallets, and mobile payments. In order to complete the payment or transaction, the consumer doesn’t need to have any cash.
Cashless to Contactless Payment amid COVID-19 Spread
This is a very crucial time as the entire world is suffering from COVID-19 pandemic. In this pandemic situation cash is no longer a king. As per World Health Organization (WHO), the novel corona virus can spread through credit card, debit card, and cash payments. WHO has suggested to continue with contactless payments and avoid using cash for a certain period. As per a scientific published paper, it is found that the corona virus can live on cardboard for nearly 24 hours and up to three days on stainless steel and plastic. Banknote avoidance is happening in South Korea, Iran, Japan, and the U.S. Although, Germany is considered as the cash loving economy, it has also switched to cashless and contactless payment.