The outbreak of the recent pandemic crisis has evolved the way people live and work. The practice of social distancing has taught the need for adopting contactless methods in every field to maintain distance. It is fascinating to see how contactless payments and cards are shaping online interactions and transactions for customers and businesses. Before the pandemic, people were skeptical about using contactless payment technologies. Now they are being enforced to use such methods and considered a preferred way of prevention.
The adoption of contactless payment is one of the most advantageous methods for customers. According to a recent report, the market size of global contactless payments is expected to grow at a CAGR of 11.7% from $10.3 Bn in 2020 to $18 Mn by 2025. The new-age technologies are playing a crucial role in the increasing use of contactless payments. The integration of such technologies in mobile devices is the key driver of the trend that is set to transform the future of digital financial transactions.
Considering the present pandemic situation, companies are investing heavily in adopting contactless payment solutions. The demand for such solutions is burgeoning as it instantly completes the transaction with just one tap that is projected to replace the traditional and cash payment methods in the near future.
PoS To Lead The Segment
PoS is directly associated with retailers and customers. It is an electronic device that accepts customers’ payments through debit and credit cards at retail stores. They are not entirely contactless as the customer needs to share their card to insert or swipe and enter their security pin for completing the transaction. PoS has significant benefits for customers and retailers as it reduces transaction time, low deployment cost, increased revenue, and enhanced customer experience.
Given the demand for contactless payments, PoS is also set to undergo technological advancements. To eliminate the physical touch-points, the systems will have mobile PoS bar code scanners and cloud-based PoS for increased efficiency and improved RoI.
Penetration Of NFC
The increased penetration of Near Field Communication (NFC) is driving the growth in contactless payments. Though the technology has been around since 2000, it has been unexplored and undergoing a gradual evolution phase over the years. According to industry reports, there are 3.4 Bn active smartphones in the world that are an all-time high. Out of which, over 2 Mn devices are NFC enabled.
With the outbreak of the pandemic, the recent demand for contactless payment is growing in the wake of taking preventive measures for health. It is predicted that the market size of NFC is expected to grow at a CAGR of 17% and is projected to touch $30 Bn by 2023. Furthermore, the widespread use of the technology puts a question of security on the personal data collected and gathered on NFC enabled devices. But the advancements in technology make the payment method more secure than other traditional methods. Additionally, with payment security solutions, the risk of theft on the physical card is reduced.
NFC payments are protected with different layers of security. Contactless payments are processed within a short distance limit and any fraudster trying to steal the information would stand uncomfortably close to an NFC enabled device. Thus, the proximity factor enables the first level of protection. The other level of security is user initiation in which the user has to verify the transaction through two-way authentication – scanning and passcode entering that enable strict security protocols for the user as well as the merchant.
Since contactless payment is set to acquire a huge customer base, financial experts recommend users and merchants to use their privacy and protection methods. Users transacting through NFC should password-protect their device. Even in the case of mobile theft, chances of initiating payments will strictly be prevented. On the other hand, merchants accepting contactless, digital or card payments should adopt secure infrastructure by complying with the latest PCI – Payment Card Industry standards. The guidelines of PCI strengthen payment security and protect it from potential data thefts or misuse.
The widespread adoption of contactless payments is paving the way for enhanced digital financial infrastructure. With privacy and security concerns being addressed and tackled carefully, the trend is likely to stay for long even after the pandemic subdues.