The Decline of Cash
Contactless payments are on the brink of gaining momentum in the U.S., and could potentially threaten the popularity of using cash to make payments. As a result, many companies are implementing cashless payment technologies to cater to consumer preference and improve the payments experience.
The Landscape at Large
Contactless technology helps create an efficient payments process by allowing consumers to simply tap their cards on a contactless enabled point-of-sale device (POS) without using a PIN. This allows consumers to quickly pay their bills with limited human interaction. Due to ease of use, this technology is continuing to grow in popularity.
Understanding the Shift to Contactless Payments
The rise in the use of contactless payments has been influenced by the increasingly large number of consumers who own smartphones and want to take advantage of their technological offerings. Because of multiple major security breaches that occurred in 2018, a change in fraud liability has given other companies an incentive to switch to EMV, the global standard for chip-based debit and credit card transactions, because they feel the technology may be more secure.
The Growing Popularity of Digital Payment Methods
Unlike contactless payments, the popularity of mobile wallets has grown substantially. Based on recent Speedpay Pulse research, one in four consumers currently use mobile wallet payment methods and nearly half of these individuals utilize this offering daily or multiple times per week. Despite consumer interest in digital payment methods, contactless payments are still lagging. According to Plug and Play, many U.S. banks and issuers began switching to EMV much later than other countries in order to align with consumers’ growing interest in quicker, more efficient digital payment technologies.
The Advantages of Contactless Payments
Many consumers are interested in contactless payment methods because they already have access to the required technology right from their smartphones — consumers simply tap their contactless card and complete a transaction within seconds. According to a 2018 customer satisfaction survey conducted by FirstData, contactless payment methods are faster than both cash and conventional card transactions, averaging 12.5 seconds, compared to 26.7 seconds for conventional card transactions and 33.7 seconds for cash transactions. Along with providing a quick, seamless payments experience for the consumer, contactless payments also benefit companies by allowing them to receive payments almost instantaneously.
Considering the Implications
Despite the benefits of contactless payments, there are still potential concerns associated with this technology. For instance, card clash can occur when a consumer accidentally touches more than one card on a card reader, which can result in an unwanted transaction. The perceived risk of misallocated payments could lead consumers to question the legitimacy of their transactions.
Although contactless payments are causing a shift in the ever-growing digital payments landscape, it’s recommended that companies continue to educate consumers and provide them with resources to ensure they become comfortable with newer payment technologies. By implementing these innovative methods and consistently communicating about them, companies can demonstrate their flexibility and willingness to adapt to consumer preferences.
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