Contactless payment adoption is growing around the world, and the stage is set for widespread adoption in the U.S. in the next few years. One of the most significant reasons that contactless payment technology is adopted rapidly is that it’s a win for all parties involved: consumers, merchants, and banks.
How Contactless Payments Benefit Consumers
Contactless payment cards use RFID or near-field communication (NFC) technology to transmit payment data to a card reader when a consumer taps the reader or waves the card within a few centimeters of the device. Consumers don’t have to swipe or dip their cards and wait for authorization before putting cards back in their wallets. The UK Cards Association also points out that contactless payment transactions are secure. They contain the same protection as EMV chip cards; contactless cards also create a unique code with each transaction, so it is virtually impossible to counterfeit these cards. And although it’s unlikely that someone could intercept data during transmission, the card doesn’t communicate enough information for a hacker to make a cloned card or use the data to make fraudulent purchases. For added protection, cardholders will be asked to make a payment in contact mode and use a PIN or other means to verify the user’s identity.
Contactless cards provide speed and convenience for payment transactions without sacrificing security.
The Upside of Contactless Payments for Merchants
Contactless payment technology is also a plus for merchants. Tap-and-go payments are fast, so they’ll help you keep lines short and customers happy. Depending on the type of business you operate, you may also be able to serve more customers in a given timeframe.
Also, according to Mastercard, less cash handling can decrease the potential for mismanagement and costs related to transporting cash. Mastercard has also found that contactless accounts demonstrate a higher average spend than non-contactless accounts.
Another advantage of contactless payment technology is that it has led to an increase in electronic payments, which may result in a greater opportunity to collect data on customers and their purchasing behaviors. You can leverage that information for more effective marketing, merchandising, and customer loyalty initiatives.
The Potential Impact of Contactless Payments for Banks
The report “Why US Banks Should Make Contactless Cards an Immediate Priority” from global management consulting firm ATKearney, forecasts a 30 percent increase in US card transactions within the next three years due to contactless payments, based on consumer behavior patterns in other countries. That increase in electronic payments would result in more income, an estimated $2.4 billion in the next five years according to the report.
In addition, with consumers using cash to make purchases less often also means that banks can reduce the time, expense, and risk associated with cash handling.
Contactless payments give consumers a quick, convenient and secure option for payment, and both merchants and banks may find that this helps build customer loyalty — and, for businesses that act quickly to implement contactless payment technology, maybe also market share. The key to maximizing the value that implementing contactless payment technology can provide to your business may be not to wait. Act now.