As the economy reopens, things have changed. The pandemic was a catalyst of retail innovation and will have a lasting effect on consumers’ payment preferences. Read on to learn more about what exactly contactless payments are, some key contactless payment trends, and how you can leverage them.
What is a Contactless Payment?
The term “contactless payments” is an umbrella phrase describing multiple payment methods. According to Investopedia,
“Contactless payment is a secure method for consumers to purchase products or services using a debit, credit, or smartcard—also known as a chip card—by using RFID technology or near-field communication (NFC).
To make a contactless payment, tap your card near a point-of-sale terminal that is equipped with the contactless payment technology. Since contactless payments do not require a signature or a personal identification number (PIN), transaction sizes on cards are limited. The allowable amount for a contactless transaction varies by country and by the bank.
Contactless payment is also referred to as tap-and-go by some banks and retailers. Examples of non-credit or debit card contactless payments include transit cards, Apple Pay, Android Pay, and Google Wallet.”
4 Important Contactless Payment Trends
1. Not Just an Option, a Preference
While the adoption of contactless payments in the United States was initially slow-moving, the pandemic has sparked rapid growth and this payment method is now a preference, not simply just an option.
According to Visa’s Back to Business Study, “If all other factors were equal (price, selection and location), nearly two-thirds (63%) of consumers would switch to a new business that installed contactless payment options.”
The study also discovered that safety influenced how 78% of global consumers pay and that 46% of consumers believe using contactless payment methods is among the most important retail safety measures.
Additionally, American Express recently reported that 70% U.S. merchants are experiencing customers requesting the option of contactless tap-and-go or mobile app payments (American Express 2020).
Needless to say, contactless payments are here, and they are here to stay. Instead of simply being a futuristic option, they are now a present-day necessity.
2. An Ageless Trend …
While you might assume that the desire for contactless payments is strongest with younger generations, the numbers might surprise you. According to Dynata’s recent report, “A Breakthrough for Contactless Payments,”
“Generationally, the largest growth in both contactless preference and adoption occurred among Baby Boomers – preference jumped from 45% pre-COVID-19 to 55% today, and adoption of a contactless card or app increased from 67% to 71%. This is followed by Gen Z, Gen X and Millennials.”
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3. … and a Lasting Trend
A substantial amount of contactless payment adoption occurred during the pandemic – however this adoption is slated to remain relevant for years to come.
According to Mastercard, 74% of consumers state they will continue to use contactless payment methods post-pandemic. Additionally, roughly half of respondents had already swapped out their top-of-wallet card for one that offers contactless payments.
4. Listen to Your Customers … Literally
Most contactless payments today happen via contactless cards, mobile wallets, and smart watches. However, that will likely change, and soon. Enter, voice assistants.
Voice assistants, also known as home assistants and smart speakers, allow people to give voice commands and receive a vocal response in return. Users can give commands for many things like the weather forecast, traffic updates, booking a rideshare – and of course, buying items. Some examples of popular voice assistants are Amazon Alexa, Google Home, and Apple HomePod.
These voice assistants are making a splash in the industry and are a worthwhile contactless medium to pay attention to. According to Statista, by 2024 the number of digital voice assistants in use worldwide is expected to hit 8.4 billion by 2024, and 35% of smart speaker users buy products like home care, groceries, and clothing from the speaker.
How to Take Advantage of Contactless Payments
Ready or not, contactless payments are the future of commerce. Here are three simple ways to take advantage.
- Update Your Point of Sale. First and foremost, businesses should deploy contactless payment terminals, so they are able to accept payments from contactless credit and debit cards, smartphones, and smart watches. For contactless online ordering orders, it’s crucial to have a connected receipt printer that can effortlessly accept orders no matter where they come from (whether it’s from a mobile app, a website, or a home speaker).
- Spread the Word. Accepting contactless payments can improve the customer experience and aid in creating repeat business. Let customers know that you accept contactless payments by communicating with them – in the right channels. Because a variety of generations are leveraging contactless payments, be sure your messaging reaches them where they’re at. In addition to sharing your news on your website, app, and through your emails, this might look like communicating to Gen Z on TikTok, Baby Boomers on Facebook, and Millennials on Instagram.
- Consider Voice Shopping. Digital voice assistants are the next big thing. If possible, consider starting voice retailing. For more information on how to sell products to customers through voice via Amazon Alexa, click here. And to learn more about Google for retailers, click here.