The rapid spread and subsequent impact of the COVID-19 pandemic is drastically affecting our lives, including the way we make payments. Focus on infection prevention and social distancing have become a new norm in today’s situation, causing people to decline cash and embrace the digital and contactless modes of payment. This might be but a turning point for the fintech industry– and a huge step towards a cashless society.
Touchless payments – the time is now
Due to the highly contagious nature of the coronavirus, more and more people all over the world decide to use contactless payment methods as they involve less physical interaction - customers can simply wave their smartphone across the reader to pay.
No-touch payments are encrypted, secure and very quick —transactions take just seconds. According to new research, even American users, who were generally skeptical of contactless payments, are now becoming more interested. For example, just in the first quarter of 2020 Mastercard’s contactless payment transactions jumped 40% .
The most popular technologies behind contactless payments are NFC (Near Field Communication) or EMV (Europay, MasterCard, and Visa). Both have already existed for years, but the coronavirus threat boosted the need for their widespread adoption.
The growing deployment of NFC technology by retailers is also expected to affect POS (point of sale) transformation. According to Berg Insight, more than 88% of the world’s POS terminals will be NFC-ready in 2024 to make sure that consumers can leverage the latest, most secure forms of payment wherever they go.
From cards to codes - one-click payment methods
The lockdown is also impacting the payment processing needs for all those people who now shop remotely more than ever. As commerce moves online, retailers need to make sure their authorization process is quick and secure, as it is when using a regular POS terminal. And here enter the codes.
The method of substituting real card data with a token is one of the most effective ways of customer data protection. Moreover, it enables retail companies to provide smooth payment flow and much better user experience for modern customers, who expect nothing less than seamless transactions.
Payment tokenization is especially helpful for merchants that accept recurring payments and offer one-click purchases. No wonder, that more and more platforms adopt this approach, especially in Europe. For example, BLIK - a Polish mobile payment standard based on generating a special passcode for confirming the transaction – is already used by more than 8 million users across Poland. Only in the first quarter of 2020, the total number of transactions processed by BLIK was 57.5 million.
The other alternative quick payment method is QR (Quick Response) code, which is quite common in Asia. Most people in China pay using their smartphones to scan QR codes through two of the most popular mobile payment platforms: WeChat Pay and Alibaba’s payments. Scanning a QR Code is more comfortable than typing in Chinese. According to the “China Mobile Payment Users 2019” report, proximity mobile payment users in China in 2019 reached 577.4 million (by far the largest in the world).
Coping with crisis
With the constant improvement of existing touch-free technologies, more businesses and consumers are adopting new payment methods in an effort to avoid contact amid the Coronavirus pandemic. There is a good chance that the impact of the current situation will go even beyond customer behavior and expectation - as it will affect the entire fabric of the world’s economy.
Contactless solutions not only reduce contamination risks – they also bring huge benefits by making payment processes much faster, more transparent and more secure than ever.