The contactless payment market is on a tear, with predictions that it will hit $358 billion within the next five years. While health concerns may have bolstered the use of touchless payment methods like mobile and contactless cards, the convenience factor may be what keeps contactless payments buzzing for years to come.
With all the attention on contactless payment methods, it’s become imperative that enterprise software include them within their solutions. According to a Mastercard poll, 51% of Americans are now using some form of contactless payments. An increasing number of consumers rely on contactless payment methods across a variety of shopping needs, including groceries, retail, fast food, transit, and pharmacies. The availability of contactless payment methods is becoming ubiquitous, making it more important than ever that ISVs not overlook this opportunity when creating or expanding their enterprise payment options.
Understanding contactless payments
Contactless payments happen when transactions don’t require physical contact between an in-person terminal and a consumer’s device to pay. Instead, the consumer holds the contactless payment method — whether a card, mobile phone, or other devices — close to the payment terminal, where payment information is transmitted wirelessly via radio frequencies.
Also known as “tap to pay,” contactless transactions more than doubled in 2020, with 31 million Americans using a Visa contactless payment method in March 2020 — a 24% increase from just four months prior. These payments can happen via digital wallets, mobile apps, or contactless payment cards. The former happens with payment information that is stored on a smart device, allowing customers to make payments sans physical cards. The latter still leverages a payment card, but avoids the swipe or dip action required by non-contactless cards in favor of a simple tapping motion near the contactless-enabled POS terminal.
Consumers are drawn to the convenience of contactless payments, sometimes referred to as touchless payments. While certain realities from the past year may have driven this behavior, the convenience factor is likely to propel the success of these payment methods far into the future.
Merchants need help transitioning to contactless
ISVs can help make their merchants the heroes of their own commerce stories, but some have a way to go. Consumers may have been quick to adopt contactless payment methods, but merchants have been slower to offer them. The result is sometimes an awkward exchange between staff and customers that could be avoided via software with an embedded commerce solution.
Awkward exchanges are negative ones in the customers’ eyes. Merchants who want to avoid these poor customer experiences are looking to ISVs to offer software that facilitates frictionless and contactless merchant payment options. ISVs also have the opportunity to go beyond simply helping merchants avoid upsetting customers and can help optimize the customer experience in a way that builds brand loyalty for merchants.
Contactless: coming to a merchant near you
Many merchants have already taken steps to offer contactless payment methods, but many still wonder what the use cases are. ISVs that use payments as a strategy can aid those merchants to not only enable contactless payments but to improve the customer experience via one of the following new ways to pay:
- Contactless card readers can make checkout a breeze for customers who want to avoid touching high-traffic surfaces.
- Branded text-to-pay options allow customers to pay via a secure link sent via text or email right to their phone.
- Digital wallet acceptance (Apple Pay®, Google PayTM, etc.) allows customers to use branded wallets they trust to pay easily and quickly.
- The “scan-pay-go” method is picking up steam in the UK, enabling shoppers to scan UPCs of grocery items on their mobile phones as they shop, bypassing checkout lanes completely when they are done.
Benefits of contactless payments
One obvious benefit of enabling contactless payments is meeting consumer demand. Still, there are plenty of other important reasons why contactless payments make sense, especially as part of an enterprise payment system:
Security - Contactless payment methods (touchless payment cards, digital wallets, etc.) have built-in security measures that make them especially appealing. Not only do they encrypt card data, but certain devices can also add additional layers of security by simply becoming password-protected or utilizing biometrics.
Efficiency - Contactless payments are fast. Touchless options help people move through lines much more quickly instead of wasting time interacting with POS systems. This level of efficiency helps merchants speed up checkout lines.
Versatility - Each consumer is unique in her preferences, including ways to pay. Adding touchless payment options allows businesses to diversify the methods they offer to consumers and better serve a wider range of needs, improving customer satisfaction.
The bottom line is that contactless payments of all shapes and sizes are quickly becoming the norm — and expected by consumers across verticals. ISVs must maintain pace with these evolving consumer expectations and build enterprise payment systems that help merchants accommodate them. Offering the latest — and most preferred — payment methods within their software solution is the best way for ISVs to serve their merchants and gain a competitive advantage. Contact us today to learn how we can help.
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