In this contact less world, AI and contactless payments are the future
Social Distancing. Yes! That word that evolved into something of a lifestyle in 2020. With the need for people to ‘contact less’ the practice has percolated into every aspect of society. More denizens today are preferring online interactions and transactions, in order to maintain distance. And this, in a fascinating way, has shaped the impact of AI based contactless payments in this rapidly evolving global ecosphere.
According to a global consumer study conducted by Mastercard, 8 out of 10 respondents said they use contactless payments. That’s an incredible number of people willing to adapt to changing trends. Not surprisingly, more businesses and individuals are imbibing contactless forms of payments into their processes and lifestyles.
In the wake of the recent health crisis, with people maintaining home isolation and remote working, digital payments have witnessed a phenomenal expansion. With renewed focus on AI and machine learning technologies, there is greater attention being paid to accessibility, connectivity and security elements. Artificial intelligence in digital payments is not just a fad that we are experiencing, it is the new way of life, and soon ‘contactless’ and ‘contact less’ are going to be the norm.
What is contactless payment and how do contactless cards work?
Digital payments are creating avenues for lesser physical contact between man and machines. While payments made via mobile phone apps or mWallets are still one of the most popular forms of no-contact payments, the contactless payment card is gradually picking up.
But how do contactless debit and credit cards work?
Contactless payments (i.e. card based) refers to a digital transaction method whereby consumers/users can make a purchase using their RFID or NFC enabled chip card (debit, credit or smartcards). Contactless technology allows consumers to simply tap their cards in a POS machine without having to physically feed in a PIN (unlike debit/credit cards). There is minimal contact made in the process, a fact that probably has led to its naming.
This naturally raises the question as to how safe and secure is a contactless payment system, to which most banks and service providers answer in the affirmative. These cards are enabled with EMV chips and based on country-specific government regulations, there is also an upper cap on the amount terminals will accept without additional credentials and verifications.
The future of Contactless payments: The new world order for digital financial transactions
With reference to the Mastercard survey mentioned previously, there are several other interesting insights to consider.
First, in the months of February and March, the number of cashless transactions grew twice as fast as non-contactless transactions in the categories of grocery and drug stores (essential services).
Second, nearly 79% of the respondents mentioned they are using contactless payments for necessary transactions. The key drivers for this were concerns of safety and cleanliness at the point of sale.
And finally, almost 82% of the respondents viewed contactless payments as a cleaner way to pay and are 10X times faster than other methods of payment.
The future of transactions and contactless payment options are naturally evolving considering current economic and social conditions. Consumers prefer to minimize physical contact, rely on digital payments and are willing to adopt smarter methods that are convenient, secure and immediate.
Business Benefits of adopting Contactless payments:
There’s little doubt that businesses (think Visa, Citi, Mastercard etc.) are working at a breakneck pace for meeting market demands. It is estimated that the contactless payment market size will grow to US$ 18 billion by 2025 (Source: ResearchAndMarkets.com report on Contact Payment Market by Component) which is likely to accelerate the demand for mobile and wearable payment devices.
Similarly, in February 2020, for instance, there were 723 million contactless card transactions made in the UK and other countries; a remarkable 12.2% increase from 644 million in February, 2019 (Source: ukfinance.org.uk).
The co-dependence on AI technology and NLP in FinTech solutions has accordingly witnessed phenomenal growth in the last few months. And especially with the change in global economic conditions and health concerns, it is safe to assume that the world is soon going contactless.
On that note, let’s take a closer look at the shift in digital payments and why businesses are looking at contactless mobility solutions:
Improved Customer Experience:
Speed and convenience are two of the most popular reasons for going contactless. Contactless payments clearly gives customers the opinion of a cleaner way to pay. In a post-pandemic world, where sanitation levels would be paramount, customers are likely to prefer the least physical contact for payments. Moreover, it is also a quick and secure way to transact, compared to a cash-based transaction. According to Passkit, a contactless payment transaction averages around 12.5 seconds while card transactions require an average of 26.7 seconds and cash transactions require 33.7 seconds on an average. And when time is money, this is something worth relying on.
Improved Employee Experience:
Beside offering improved customer experience, contactless usage of credit cards also ensures employee safety, lesser queues, and less number of dissatisfied customers. Employees can focus better on serving customers and worry less about the monetary exchange of currency and transactions, especially when dealing with petty cash. This is all the more true in retail (eg. grocery, malls etc.) especially during weekends, peak hours, and festive periods, when there is greater rush and lesser manpower. With contactless payments, the average handling time per transaction and customer not only lessens, but even keeps the transaction safe, prompt and swift.
The convenience of pay and go:
Often there are situations when one has to dabble between cards and phones, trying to choose between the preferred payment option. While this gives the individual customer the choice, it also creates inconvenience for others. A contactless card does away with this. It is built for convenience and the pay-and-go culture. No need to wait in payment terminals, try PINs at POS machines, or even create inconvenience.
The contactless card features provide a sense of security and mental peace to people while helping merchants process payments faster, reduce the number of failed transactions, better sales, and improved customer service.
Contactless payments are secure, faster, and provide higher customer satisfaction. Today, contactless payments are the norm instead of it being a trend. While businesses are preparing for a new post pandemic world, it is essential that businesses be prepared to adopt contactless payment methods in their systems. In the study, 74% of respondents mentioned they would continue to use contactless payment methods post-pandemic, indicating how payments are going to change.
The future of Contactless payment technology in 2020
Thales, a provider of contactless solutions showcases a brilliant example of how contactless solutions must be designed according to the unique needs of a business in one of its case studies. Octopus Cards Limited (OCL), one of their clients is the operator of the Octopus cards, a stored value contactless card used widely in Hong Kong to pay for various services and facilities, including public transport to online shopping. By leveraging Thales’ Trusted Service Hub Solution, the solution Smart Octopus was created. Smart Octopus allows users to digitize their Octopus cards in the contactless payment app Samsung Pay. Smart Octopus allows users to enjoy the same benefits that Octopus cards provide.
The world is looking at going cashless completely. But the rate of adoption has been varied across nations. Countries like Australia, Canada, and the U.K. have adopted a contactless economy fast, while in countries like the US, India, and Germany, the pace has been slow. But, it’s gaining pace.
According to a survey conducted on 1,030 people by Ipsos for FIS, contactless payments in the USA will thrive as three in every ten consumers in the U.S. will either adopt contactless or mobile payments. Another finding of the survey is that 31% of the consumers will use online banking and mobile payment platforms.
With the capability of making payments at 1/5th of the time, normal card transactions take place, along with the safety and security of payments, one can see why contactless and mobile payments will be the way of the future.
Being one of the top mobile app development companies, we see the world adopting mobile payment platforms and going back to cash in a limited capacity. This means businesses big, or small, will have to adopt payment methods which are majorly cashless. However, solutions which do not meet business goals serve no one. Developing a mobile payment platform requires skills, experience and expertise and we are second to none in this field. If you believe your business needs our technology, skills and expertise, we would appreciate being your partner and assist in your digital transformation. Are you looking forward to adopting the change? If so let’s discuss.