The payment landscape is one where digitalization has made a massive impact in terms of convenience, but this has increased the chances of cybercrime risks. That said, as more people and businesses are getting accustomed to digital payment solutions, the benefits surpass common threats.
The payments ecosystem has seen a drastic change in the way it caters to customers. However, it is also not wrong to say that customers have shaped the way technology looks today or how it will appear down the line. In essence, customers define the pace of advancements because, let’s face it—the economy runs by the forces of demand and supply.
Contactless technology has made waves in the payments landscape, a pandemic-induced trend that has now taken the helm as a viable payment method. Considering how the contactless payment transactions market is projected to grow at a CAGR of 43.7% till 2027, the future of contactless services in the payments industry is illustrious.
Let us look at the primary reasons that substantiate the assertions mentioned above and how these will shape the industry going forward.
The penetration of smartphone ownership is a marvel to witness. Adding to that is the adoption rate of mobile-based payments, which has been on a steep rise for over two years. This can be verified by the fact that smartphone-based payments accounted for over half the global revenue for 2021 in the segment. The popularity of digital payments by Gen Z is sure to bring incredible growth opportunities for retailers and merchants.
The growth path could be diverse based on customer preferences that prevail in the coming time. The ease of payment and reliance on security measures could induce the extensive use of biometrics to verify a person’s identity for a smooth-sailing transactional experience. On the downside, some are not overt proponents of such a mechanism that could breach a user’s privacy. In these cases, cryptography can be leveraged to create a secure payment technology without privacy invasion.
Nonetheless, smartphones and wearable devices are on the rise in the market, and so are contactless payments aided with m-wallets, EMVs, and scan codes. The payment avenues vary from transportation and hospitality to government dues and BFSI.
Going back to the point on how demand and supply are integrally linked in our economy, today, we see a consistent rise in the retail adoption of contactless payments. This growing trend is not going to slow down unless there is a drastic change in customer preference. The retail sector has also been bringing the largest share of revenue in contactless payments over the years. Simply put, simplifying payments at merchant outlets is a win-win for both the customer and the retailer. It reduces the time spent in queues while also reducing manual intervention to keep the counter ready for more sales.
The ease of authentication of financial transactions, especially of small values, has led to growth in the contactless payments market. The innovation in contactless payment technology has led to lesser friction in the customers’ minds, which has, in turn, reassured the merchants to invest in infrastructure that supports the use of safer and more secure alternate payment modes.
COVID-19 has made us all cautious about social interactions. Computer-vision technology has enabled automatic checkouts such as that piloted by Amazon and on-the-go order placement marketing boards experimented with by Tesco. These moves by tech giants have tingled excitement for contactless orders with tap-and-go facilities. With such smart new ways to shop and save time while at it, there is certainly no looking back.
As contactless payments become the norm, let’s not forget that adequate implementation of such payment gateways is still the key to success. According to Research and Market’s report, the global contactless payments market is set to reach $164.15 billion by 2030. With the frequent changes in usage trends of contactless card technologies such as NFC, RFID, and other mobile payment apps—retail merchants have to keep up their pace of adoption. Time is money, and by saving it, you and your customers will both benefit from the ease of secure, convenient payments.
The exponential growth in the contactless payments segment can be attributed to the development of businesses and a greater adoption rate in areas such as North America, emerging economies of Asia-Pacific, Latin America, and so on. Even early adopters like Australia, Canada, and the UK are also picking up the pace to support the overall growth. Quick bank approvals and widespread enablement of 5G internet are the specific reasons these regions register such phenomenal growth.
Whenever an industry undergoes an overhaul, collaboration can be a critical factor that could propel growth across businesses and help create value for all. As many FinTech firms are propping up in the arena, having a wholesome relationship amongst various industry players can lead to better servicing of customers and may also help reduce customer transaction costs. The same can only work if the transactional charges are not incidental to the merchants, which they can then pass on to the customers. It has been noted that up to 15% of the transaction costs can be saved in a contactless economy, which translates to a lot of value for all the stakeholders.
Contact us if you want to make the most of the prevailing contactless payment trends. We can help you sail through this vibrant payment landscape and guide you to be prepared for the future of smart payments.
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