The Future Of Contactless Payments

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Contactless payments are gaining popularity as people abandon cash in favor of less germ-prone payment methods in response to the pandemic. More on the future of contactless payments can be found here.

Contactless payments are not new; however, adoption lags prior to 2020 because global consumers saw no compelling reason to abandon the familiarity of payment cards. While digital wallets did attract some early adopters, the vast majority of consumers were content with the status quo — until now.

Following the pandemic, an increasing number of shoppers have embraced — and even demanded — contactless payments in order to avoid touching germ-infested surfaces. As a direct result of the pandemic, some experts predict that contactless payments will increase by up to 15%. According to other sources, the global contactless payment market will grow from 10.3 billion this year to 18 billion by 2025, at a CAGR of 11.7 percent.
The basic idea behind contactless payments is that consumers can transact in real time by tapping a card. It promises quick, seamless payments through online payment gateway that customers ...
... can make at their leisure. To meet consumer demand, the number of devices, terminals, and other contactless payment technologies is growing.

Merchants benefit from contactless payments as well. Contactless-capable POS terminals can reduce customer wait times at the checkout, improving the overall customer experience. The pandemic's economic impact has compelled many retailers to modernize physical stores while also improving the online experience.

Technology investments are increasing across the board as merchants embrace emerging technologies such as big data analytics, cloud computing, and contactless to increase their market credibility. Contactless POS terminals are a natural progression that can assist retailers in speeding up the checkout process and keeping customers satisfied.

Key Predictions about Contactless Payments
While the pandemic and its economic consequences have altered the payments landscape significantly, contactless payments are expected to see additional growth and activity in the near term.

Some believe that contactless payments will eventually supplant cash and credit card payments. It's not out of the question that people will prefer touch-free payments over cash. In the end, this may result in higher processing fees for the merchant, which will most likely be passed on to the consumer as higher-priced goods. It remains to be seen whether the increased costs become too much of a barrier for merchants and their customers.

Europe has been aggressive in promoting contactless payments, and Mastercard reports that contactless payments account for 75% of all Mastercard transactions in Europe. Many countries around the world have set limits on contactless transaction amounts to help reduce fraud aimed at this newer payment method. Given the rising popularity of contactless payments during the COVID-19 crisis, several countries are raising those limits in order to alleviate the difficulties of shopping during a pandemic. In order to combat fraud, most countries require consumers to enter their PIN code if they exceed the maximum contactless limit.

Another advantage of contactless payments is security
Another advantage of contactless payments over other best online payment gateway methods is security. Contactless payments have even stronger security measures than chip and PIN because they require the person to be in possession of the mobile device used to pay. A person must not only own the device, but also be able to unlock it, which usually requires a password or biometric data — a more sophisticated security mechanism than the simple password or PIN method.

Contactless payments enable multifactor authentication by requiring a person to present multiple elements of proof that they are who they say they are (via something they are, something they know, and/or something they have). These additional security measures apply to secure wallet technologies that can be used for contactless payments, but card-only contactless payments still run the risk of the cardholder not being an authorized user. Nonetheless, Visa claims to be able to keep global fraud rates on contactless payments to less than "one-tenth of one percent."
Another prediction is that contactless technology will become more widely used around the world. Contactless payments are currently mostly available in major cities, leaving those on the outskirts less familiar with the technology. Furthermore, the cost of updating or upgrading POS terminals to contactless payment systems is high. Retailers have been slow to adopt the technology in the absence of a mandate.

The Payment Card Industry (PCI) Security Standards Council is one of the regulatory bodies with the authority to push contactless. It published a new standard and a validation program at the end of 2019. This allows retail technology vendors to provide contactless solutions that have been tested and proven to protect against data breaches, giving retailers greater peace of mind.

One thing is certain: the momentum toward widespread contactless adoption is growing, with eMarketer forecasting that contactless payment transactional value will exceed $161.41 billion. Meanwhile, retailers, banks, and consumers can expect the buzz around contactless to continue. To keep up with the rapidly changing landscape, it will be necessary to prepare for this technology as a major payment method.