Contactless payment technology has become a hit with COVID-wary customers who want to avoid germy contact with cash and POS terminals. At the same time, contactless technology is popular because it cuts down wait time in a queue or at a counter.
However, contactless payment isn’t just a trend during COVID. It’s likely to stick around, as customers enjoy the seamless payment experience. Experts estimate that the contactless payment market will reach $18 billion by 2025, up from $10.3 billion in 2020.
While contactless payments are highly convenient, there are still pain points to resolve. To understand the future of contactless payments, let’s go over their pros/cons, as well as some trends in the contactless market.
Pros of contactless payments
Contactless payments – whether made with a bank card or through a mobile phone app – are beloved by customers and vendors alike. That’s because they are:
- Safe and secure: Contactless technology is highly secure, as it uses encrypted tokens to send payments. At the same time, it helps customers avoid touching a screen or handling cash.
- Reduce transaction time: Contactless payment removes the need to tap buttons on the POS terminal to confirm a PIN or payment. By removing these steps, transaction time and shop queues can be shorter, leading to greater efficiency.
- Cut cash-handling costs: Handling cash requires extra logistical and banking costs. Contactless is estimated to reduce banking expenses by 6%.
As you can see, there are some huge advantages to using contactless technology for both customers and vendors.
Pain points of contactless payments
While contactless is user-oriented, there are still some needed improvements. Customers may worry about these key factors:
- Need to carry multiple forms of payments: Customers may be concerned about shops accepting contactless payments or about having technical difficulties. For this reason, they may carry multiple payment methods just in case.
- Privacy and security: Even though payments are encrypted and sensitive payment information stored privately, customers may worry about the security of their accounts.
- Merchant fees: To cover the costs of new technology, customers may be responsible for certain merchant fees. This can be a frustrating extra that some are unwilling to pay.
- Tipping inconvenience: Contactless technology doesn’t yet allow for adding a tip. This is a problem for customers who want to thank their barista or waiter. To do so, they have to send a separate contactless payment, which can be a nuisance.
- Smartphone or wearable required: You’ll need a smart device with wi-fi service, as well as a bank account, to take advantage of contactless payments. This can be a barrier to adopting contactless payments, as 8.4 million Americans don’t have a bank account and many more can’t afford a smart device.
Future trends of contactless payments
Even so, contactless payments are likely to soon become the norm. In fact, contactless may look quite different in the future as other technologies become available.
For example, contactless may be paired with an implant. In this way, you could pay by waving a hand or finger over a payment terminal. Crazy, right?
Contactless payments may also rely on facial recognition. Instead of paying at a counter, you could just order or buy items by facing a camera. The screen would simply recognize who you are and charge your bank account accordingly.
It’s also possible that customers will be averse to these types of payments. Instead of biometric sensors, they may prefer sticking with POS terminals. This may lead to a new generation of POS terminals with more advanced features, but without facial and biometric security. We’ll have to wait and see how far customers are willing to go for seamless payments.
Contactless payments have become a huge trend in recent years, with 900% growth since 2017. As the pandemic spurs customers to be extra careful, contactless may become even more popular. In the future, contactless may even involve an implant instead of a card or phone, though customers may be slow to adopt these measures.
Interested in improving the security of your payment system? Use our checklist to ensure your payments are processed securely. And don’t forget to reach out to our Onsharp team for expert help with payment security.