In May 2020, UK customers contributed to 1 billion credit and debit card transactions. Spending naturally dropped this year, a result of closed business premises and quarantine conditions, however a fundamental shift in the way we buy appeared.
47% of debit card and 31% of credit card transactions in the UK were contactless.
Contactless payments aren’t an entirely new concept. However, demand for contactless spending opportunities is going up. Since COVID-19 appeared, the word “contactless” has begun to gain rapid use. Payments are a particularly significant friction point for many business leaders right now.
If companies want to retain customers, they need to make them feel safe in a space where any person-to-person interaction is risky.
That’s where contactless payments come in.
The Accelerated Adoption of Contactless Payments
Contactless payments were already gaining traction before the coronavirus crisis hit. Total annual spending with contactless devices hit £69 billion in the UK in 2019. With this transaction method, customers don’t need to hand a card to a merchant or press a PIN into a digital keypad.
Consumers can make contactless payments with their credit and debit cards and store cards and smartphones, thanks to NFC (Near Field Communication). When COVID-19 hit, endless sanitisation practices and the need to avoid potential germs made contactless payments more appealing than ever. The term contactless even took on a new meaning in the pandemic.
People began accepting contactless deliveries, where companies could leave packages on a doorstep without interacting with customers face-to-face. Clients would be able to pay over the web, reducing the need for human contact.
In the UK, financial authorities did their part to reduce risk through contactless payments by increasing the contactless limit from £30 to £45. Retailers and the payments industry began working closely together to provide more opportunities for consumers. Additionally, the merchants allowed to stay open in this challenging time have largely switched to a card-only process.
The Challenges of Contactless Payments
Although there are some challenges to consider with contactless payments, the industry is working on the issue. Contactless credit cards and debit cards use RFID technology to transmit data. If someone steals a contactless card, they don’t need a PIN to make a purchase.
Fortunately, organisations around the world are working to reduce consumer fears and prevent fraud in payment transactions. For instance, the European Banking Authority introduced the second payment services directive in 2019 to assist with this. The new law requires payment providers to implement strong customer authentication methods for online and in-store card payments.
Many groups are now using things like one-time passcodes sent to a customer’s phone to support safer payments. Additionally, there are limits on the amount of cash a person can use without entering a PIN.
In the future, some innovators are beginning to consider ideas like biometric scanners as a way to enhance the security of contactless payments. Although we’re still in the early days with this technology, this could be an intriguing way to reduce the risk of people using money from a contactless card fraudulently.
The Benefits of Contactless Payments
Contactless payments make sense in a world where we all need to work together to stay safe. Mastercard says that accepting contactless payments is about 10 times faster than any other payment methods (in person). Waving a card in front of a device is much more convenient for businesses and consumers than entering a PIN.
Other benefits of contactless payments include:
- Minimises human contact: Consumers are more reliant on contactless payment options than ever. Public health organisations warn against too much human-to-human interaction. Following COVID-19, the need for contactless payments will continue, as consumers continue to prefer safer and cleaner ways of making purchases.
- Promotes social distancing: By accepting contactless payments, stores and restaurants can set up screens and other safety mechanisms that remove face-to-face interactions. Contactless payments are outstanding for maintaining distance and even enabling self-service where possible. Now that companies are having to find ways of reducing their businesses with the public, demand for contactless payments is greater than ever.
- Ease of use: Contactless payments are fast and simple. Leading up to 2020, contactless transactions were already a commonplace feature of many countries. Around the world, this trend is continuing to grow at a rapid pace. Consumers like the simplicity of flash a card or phone and make a purchase in seconds.
- Productivity: By allowing for simpler payments and more self-service, contactless payments can increase the efficiency and performance of your team. Employees can focus on other tasks for health and safety, rather than constantly dealing with transactions.
- Competition: Going forward, companies that can continue to offer efficient contactless payment methods will have a valuable point of differentiation. In a cluttered marketplace, any tool for better customer experience sets you apart from the crowd.
Adopting Contactless Payment Technology
Right now, businesses don’t have a choice as to whether they should go contactless or not. Retailers must deliver solutions that prioritise customer and staff safety. At Nice Network, we’re always available to help companies implement new tools for customer experience.
Recently, we worked with a retailer on transforming their business to accept more contactless and app-based payments. This involved implementing stronger connectivity tools and better systems for security so that consumers could easily access self-service kiosks and align themselves with social distancing demands.
Implementing self-service solutions meant that the retailer could easily adapt to lockdown measures and ensure proper preparedness for any upcoming changes to regulations. The solution also means that the company can offer a more effective service to customers, by helping them to pay for their goods without waiting in lengthy queues.
As we saw when working with this retailer, there are various questions to answer when implementing a contactless payment system. For instance, we needed to work with the team to answer questions like:
- Can customers purchase products without any staff support?
- Are there any issues processing and accepting payments securely?
- Can clients continue to benefit from rewards and points in a loyalty program?
- Can you offer contactless payments during delivery?
- Is the contactless payment process simple enough for the customer?
- What kind of contactless payments should be available? (Just card, or card and phone?)
Businesses need to ensure that they put the correct quality assurance tests to deliver excellent outcomes for all of their clients. Simultaneously, the technology in the workplace must support contactless transactions in a way that’s consistent, efficient, and secure for all consumers.
Robert Webster, Business Development Manager at Nice Network, said: “Contactless payments are now a table-stakes technology for any business. Companies that want to stay ahead of the curve in a world obsessed with safety and simplicity must be prepared for a contactless future. Going contactless isn’t just a quick fix for the lockdown months – it’s a long-term strategy that demands the right plan.”
The Future of Contactless Payments
It isn’t just germaphobes that are avoiding cash these days. The COVID-19 pandemic means that we’re all much more concerned about the things and people we interact with every day. Scrubbing your hands with alcohol wash after you’ve entered your PIN on a card machine isn’t as effective as not touching the device at all.
Since the coronavirus pandemic, around 27% of small businesses have seen an increase in the use of contactless payments over cash. Everywhere you look, contactless transactions are becoming an essential part of the health and safety precautions that businesses take to protect themselves and their customers.
Going forward, the benefits of contactless payments will only continue to grow as the technology available evolves. Companies will continue to see the advantages of using contactless technology for efficiency and productivity. All the while, technology like biometrics and advanced strategies for security will reduce the common risks of fraud and theft associated with going contactless.
If your business is ready to take the next step in contactless technology, reach out to Nice Network today to transform your transactions.