By How contactless payments are revolutionizing digital payment services.
The use of contactless payment methods was still widely recognized and used even before the coronavirus pandemic hit the world. However, with the strict rules and caution that had been put in place such as social distancing and avoiding unnecessary contact, these contactless methods have gained more popularity. Contactless payment methods have not only improved the digital payment systems but have also helped curb the spread of the novel coronavirus.
A survey that was done in March shows that almost 30 percent of merchants and individuals have begun using contactless payment methods since the start of the pandemic. The survey further suggests that about 70 percent of them will continue using the contactless payment methods even after the pandemic.
How has the covid-19 pandemic catalyzed the acceptance and adoption of a contactless payment system?
An increase in the level of adoption of contactless payment methods has been experienced since the pandemic started. How exactly has this happened?
In the United States, 51 percent of the population has shifted from the use of cash to mobile wallets and credit cards that give tap-to-go functions. The amount of people that now use contactless payment in the US has risen to a whopping 58 percent, this is a steep increase compared to the number of people who used the service before the pandemic. The level of adoption is high as more than half of visa holders who are not in the US opting to use tap-to-go services.
The banking sector has not been left behind in this whole new digital payment method. Many banks in the US including Bank of America, Chase bank, U.S Bank, and many others have adopted contactless payment methods. However, the adoption of contactless payment has not only been witnessed in the United States.
- Germany has shown a tremendous increase of contactless payment adoption from 35 percent before and now over 50 percent due to the pandemic.
- In China, the cash purchases were surpassed by contactless payments and e-wallets by 25% which indicates a very high rate of adoption.
- Visa has estimated that by the end of 2020, there will be over 250 million contactless cards that will be in circulation
- WHO has also recommended the use of contactless methods of payments to help reduce the spread of the coronavirus.
What is the technology behind the development of contactless payment systems?
We have understood the story behind the success of contactless payment systems and the reasons for its speedy adoption. However, we also need to know why businesses prefer to use contactless and other e payment methods as opposed to cash.
Contactless payments can be categorized into two; contactless cards and E-wallets. Here we take you through both of them
- Contactless cards
The use of contactless cards is made possible by the technology they use. The use of point of sale (POS) terminals through near field communication (NFC) or the use of radio frequency identification (RFID) make it a success. A unique pin is generated per transaction to ensure the security of the process is guaranteed.
No pin is required as this method uses Cardholder Verification Limit (CVM) to identify the user and protect the account.
- E-wallets
E-wallets otherwise known as electronic wallets have done a great deal in making contactless payment a success. There are many e-wallets including apple pay, google pay, Venmo, Masterpass, and many others.
They work by tokenizing information to secure sensitive data from fraud. Data is replaced by a token or value and the token, in turn, secures the sensitive data prone to scam. This makes it one of the most secure methods of contactless payment.
Contactless payment is becoming the new engine of digital payment
No one can deny that the world is in a dynamic stage of a technological revolution. Our payment methods should therefore also align with the inevitable changes. Fintech companies together with banks are working tirelessly to provide the best secure contactless payment methods that make transactions quick, easy, and secure.
This collaboration has had mutual benefits for both FinTech companies and banks. The collaboration is not just purely about payment because we see banks also offering new strategic programs for startups and early-stage companies.
The coronavirus pandemic has had adverse effects on both the social and economic well-being. It has on the other hand been the greatest booster of digitalization throughout the world. Digital payment has had its fair share of success thanks to COVID-19. Many businesses have now embraced contactless digital payment and are expected to continue with its post COVID. You will love the best contactless payment applications , beacause you will be surprised to get amazing information about contactless payment and much more.
