While the contactless method of payment took some time to become widespread in specific corners of the world, still it is enjoying a sudden growth spurt in the modern retail world. It is becoming a trend that is known to continue across the period of 2020 as well.
The overall market size for contactless payments across the world is expected to grow from the value of $10.3 billion in the year 2020 to reach around $18 billion by the time of 2025. Therefore, it is going to achieve the CAGR (Compound Annual Growth Rate) of around 11.7 percent during the given forecasting period.
Why are Contactless Payments Becoming So Popular?
Contactless payments are known to be based on the NFC (Near Field Communication) or RFID technology. These are available in multiple forms including debit cards, credit cards, smart cards, smartphones, key fobs, and various other devices including wearables. Payments using the contactless mechanism are secured with the help of highly safe systems like Google Pay, Apple Pay, Samsung Pay, Fitbit Pay, and others. It can be implemented by any mobile application that is capable of supporting contactless payments.
A recent study report revealed that over 53 percent of the transactions taking place around the world at PoS (Point of Sale) are going to be contactless in a period of the next 5 years. There are several reasons to make use of contactless payments –both for the retailers as well as consumers. Here are some:
- Speed: It is believed that it takes just around 15 seconds to complete contactless transactions. These are known to function twice as fast as the standard payments cards. With reduced processing as well as handling of cash, contactless payments are known to be completed at a rapid rate. As a result, the overall turnover can improve and there is the reduced chance of the queue building up.
As the overall utilization of pin numbers is no longer existent and the transaction only requires a tap on the reader, the number of staff can be reduced while distributing them to the shop floor for improving other core areas of customer services.
- Secure: In case you tend to lose your card or it gets stolen, then you can freeze the account or contact the respective bank account who would amend any fraudulent transaction happening on your account. With contactless payments, as the user is only required to tap the card on the respective reader, the overall risk of fraudulent theft or activities might appear slightly higher.
However, with the help of the built-in protection mechanism, you can be ensured that the given transaction does not occur again by accident. Even if it happens, the numbers and details that are linked to the card cannot be decrypted. This is because unique numbers are utilized for transactions that do not correlate to the respective card numbers.
- Effortless: Contactless payments are not just limited to the utilization of cards. The revolutionary NFC technology that remains embedded within the contactless readers is capable of interacting with phones as well as connected accessories like watches. For instance, the launch of Apple Pay in 2014 enabled the users to make the payments even if they forgot their cards or if the card was out of reach. This was enabled by simply carrying around their phones for implementing the transaction.
This got developed further as Apple Watch got launched. You can also look forward to making the payment from within the wallet without having the requirement to remove the card. This makes the overall process of payment quite easier for the end consumers.
- Hygienic Way of Payment: Given the era that we are living in, the world is facing the wrath of the coronavirus pandemic. As per the health experts, bacteria & viruses are known to thrive on cards as well. This is the reason why contactless payments have become a great alternative to ensuring safer ways of payments.
Now, more than ever, customers are looking forward to avoiding handling keypads or cash for flattening the coronavirus curve in different parts of the world. However, it is still recommended to ensure that you are constantly cleaning your phones to ensure that there is no spread of virus anyhow.
COVID-19 Accelerates the Use of Contactless Payments
As per a recent study report, it has been estimated that around 74 percent of people accepted that they would like to continue the utilization of contactless payments –even after the covid-19 pandemic would end. Contactless payments are known to make use of the tap-and-go technology for providing consumers with a secure, convenient, and no-touch payment mechanism with the help of their smartphones, debit or credit cards, or any other electronic device like Fitbit or Apple Watch.
No-touch payments systems remain vital to ensure the overall health of retail workers as well as consumers. Since the time of January, retailers have reported around 69 percent increase in the number of contactless transactions. The continuing trend appears promising to go beyond the year 2020. It is anticipated by around 94 percent of the retailers out there that contactless payments are going to rise significantly in the period of next 18 months.
The future of the growth of contactless payments across the globe not only depends on the retailers and their overall ability to employ the right payment infrastructure while encouraging its utilization. At the same time, the consumers are also required to get on board. As per another report, 57 percent of retailers claim that they are going to employ the contactless payment methods even when the pandemic would end.