On a rise even before COVID-19 was announced as a pandemic, contactless payments were rapidly taking the helm as a viable payment method. And despite the multitude of vaccines on the horizon, the now germophobic customers continue to redefine the way Banks and organizations do business.
The changing trends
As technology continues to evolve, credit card issuers, Banks and fintechs alike are responding to the ubiquitous needs of the end consumers. For example, as a result of covid-19, mastercard reported a 40% rise in contactless payment usage during 2020’s first quarter. Contactless transactions have become more than just buzzwords.
According to a study by A.T Kearney, a mere 3% of the U.S cards leveraged contactless technology in 2018. Now, however, as Americans emerge from the novel coronavirus induced lock downs and quarantines, their behavior is changing.
The U.S has been historically slow in its adoption of contactless payments. However, the tap to go technology is rapidly defining banking and payments roadmaps in the U.S.
But does this mean we are veering towards a truly cashless society? Perhaps not. The true "death of the physical wallet" might not come to pass that easily. But this does mark a step in that direction.
Contactless Payments: a source of convenience
Much like the name suggests, such payment methods do not require physical contact between your credit card or smartphone and the Point of Sale (POS). The plethora of mobile wallets such as Apple Pay, Samsung Pay, Google Pay, etc in the market leverage contactless modes of transactions.
Have you seen customers tap their phones or cards to pay for their curbside pickups? If you answered "YES" then you have seen the technology in action.
In a world where plexiglass barriers might remain as the last vestiges of the traditional banking experience, the tap to go technology offers customers convenience and assurance.
Are contactless transactions more secure?
Additionally, contactless cards, like cards with EMV chips, and mobile wallets leverage better security. The traditional magnetic stripe cards are easy to clone. This can leave your customers vulnerable to fraudulent charges.
On the other hand, in a contactless payment, the payment terminal receives a unique token for every transaction. This token does not contain credit or debit card details.
Contactless card transactions use the same security as a chip based transaction, but are able to process details much faster. Digital wallets add an additional layer of security through the need to verify with a PIN, password, etc before the transaction can be completed.
This raises the security bar for fraudsters looking to hack their way towards your customers' information.
Riding the tailwinds created by COVID-19, Banks are accelerating towards these secure payment systems. However, for a bigger ROI for your efforts and investments, a Bank might need the right domain experts in its corner. Go-Live Faster's expertise allows for a quicker transition from legacy payment systems. Through reduced test cycles and increased test coverage, Banks can accelerate their Go-Live under tighter implementation budgets.
Convenient, secure and easy to use, contactless payment methods offer value to every stakeholder: retailers, consumers and issuing Banks. Benefits include:
- Higher revenue to issuing banks since your customers will be carrying out a greater volume of low value transactions though "tap and pay" cards and mobile wallets.
- Socially distant and faster transactions, which consumers continue to prefer.
- Increased revenue for retailers as a result of faster checkouts.
- Greater security resulting from greater cash management for both retailers and end consumers.
- Better customer experience because of lower queuing.
Final thoughts
Barring a few exceptions, according to VISA, a majority of the U.S merchants accept contactless cards. Harland Clarke also notes that consumers with first generation chip cards are rapidly approaching their banks for contactless counterparts.
As the pandemic drags on, Banking customers will ferment habits leaning towards contactless transactions. This will create a landscape that will act as fertile ground for contactless technology to spread its roots.
If the Bank is already on the contactless payments bandwagon, it's time it accelerated its journey to meet changing consumer demands. With Go-Live Faster, Banks can immediately leverage ready assets including, but not limited to a critical defects repository from prior implementations and automated business scenarios/cases for faster validations during an accelerated payment system integration.
Avoid regulatory non-compliance and top risks that can deter implementation and directly impact Go-Live. Readiness is the silver bullet for success across all programs, especially those that impact end-customers.
Be well prepared with an able partner, having niche Banking domain expertise and decades’ worth of consulting and implementation experience, by your side.
