The mobile contactless payment market has an estimated global volume of $2.49 trillion – and it’s seen more than 100 percent growth in the past two years. However, the U.S. market volume is only a fraction of that total that, according to Statista, is just $111 billion.
Adoption of any technology takes an incentive to try it and then the opportunity for consumers to develop the habit of using it. The pandemic may be the catalyst that finally leads to the U.S. catching up with the rest of the world – and ISVs and VARs need to position their businesses to be ready for this change.
Here are four reasons you need to enable your clients to accept contactless payments.
1. Increasing Familiarity with Contactless Payments
Prior to 2020, many merchants had already upgraded their payment technology to accept EMV payments, which is the same technology used for contactless payment transactions. The pandemic drove many consumers to finally try using their mobile wallets to make purchases at these businesses so that they could minimize touch during payment transactions.
Mastercard reported a 40 percent increase in contactless payments during Q1 2020. Additionally, according to Mastercard Contactless Consumer Polling, more than 51 percent of Americans are now using contactless payments for buying essentials:
• Grocery: 85 percent
• Pharmacy: 39 percent
• Retail: 38 percent
• Quick service restaurants (QSRs), fast food: 36 percent
Now that U.S. consumers have used contactless payments, there will be an increasing expectation that consumers will be able to use them everywhere they shop.
2. Health and Safety Concerns
Though studies place the risk of catching COVID-19 from cash or touch surfaces as low, consumers’ perception of cash or a shared PIN pad as “unclean” is high. This aversion is a psychological factor propelling the adoption of contactless payments.
Consumers have been trained throughout the pandemic to become more conscious of avoiding shared items or touching surfaces in high-trafficked areas. Thus, consumers have favored contactless or touchless options. Consumers will also likely perceive merchants offering contactless payments as more empathetic to their concerns about their health.
3. Superior Security
Contactless payments use the same technology – and security – as EMV payments. Just as EMV, contactless payment transactions include generating a unique code that validates the payment. Also, when consumers choose to use a mobile wallet, they have the added security of their smartphones’ native data tokenization. Additionally, a smartphone requires a passcode, pattern, or fingerprint to unlock it. In the case of a lost or stolen phone, consumers can wipe or remotely lock their screen, preventing access to the mobile wallet.
Those less familiar with contactless security may have misconceptions about contactless payments. One of the most common myths is electronic “pickpocketing,” where a consumer’s contactless card information is supposedly stolen by another person standing close by with a near-field communication (NFC) card reader. However, this scenario is nearly impossible in the real world. For the NFC technology to work, most readers need to be within centimeters of the card or mobile device to work. Furthermore, if someone could copy data from the card, they wouldn’t have all of the necessary information to use the account to make a purchase.
4. Merchants Must Compete on Experience
The 2021 consumer no longer bases loyalty on product or price. For merchants to win business, they must provide the best possible customer experiences. There is definite ROI. According to the Temkin Group, companies that earn $1 billion annually can expect to earn an additional $700 million within three years of investing in customer experience.
The vast majority of buyers – 86 percent — are willing to pay more for products if it means receiving a great experience. For the 2021 consumer, contactless payments are among those expectations.
Contactless Payments Are Crucial for Success
As trusted advisors, you need to ensure that your clients are in the best position to meet consumers’ expectations – and this can no longer be achieved without the ability to accept contactless payments.
Trends, such as consumers’ greater concern about health safety, data security, and customer experiences, are converging to make contactless payments standard. Make sure you increase the value of the solutions you provide by giving merchants this essential capability.
