Suresh Palliparambil, the CEO of the Purewrist, writes for PaymentExpert on the rapid acceleration of contactless payments and what is next for the technology.
The pandemic has brought a series of societal changes that will be instilled for years to come, and one of those swift, yet monumental, shifts is in our monetary transactions for goods and services.
The global pandemic has paved the way for contactless technology in the United States, and around the world, as consumers worked to protect themselves against the virus on surfaces or person-to-person exchanges.
Contactless tech has been around for years, but only recently, has it become an integral part of our day-to-day life. Pre-COVID, contactless technology was slowly trickling over to the U.S. from European countries.
In 1990, the New York City subway graduated from a coin-based payment system to the swipe-to-pay system. In 2015, credit cards began having RFID chips to insert into card reading machines upon checkout. The growth to “tap-to-pay” has been the trajectory, but it’s now the mainstay.
At the beginning of the pandemic, consumers were reluctant to turn to contactless payments due to security concerns. However, according to the NRF, 67 per cent of retailers have adopted some form of contactless payment. As we make our way back to normalcy, we can expect to see close to 100% in the near future.
The slow rise of contactless tech in small businesses
It’s no secret the COVID-19 pandemic significantly impacted businesses large and small in the United States. Many shuttered their doors for months, and when they felt safe and stable enough to reopen, the pandemic caused a change shortage. With stores like Chipotle only accepting exact change, Americans turned to their credit cards or used touchless transactions for payment.
You can currently find contactless payment options in larger retail chains like Walmart, Target, and pharmacies like Walgreens. Rather than inserting cards into readers as we’ve done since 2015, we now have the option to hold our credit/debit cards and smartwatches up to the tap-to-pay reader.
These exchanges of money and cards were quickly avoided once the pandemic started. While safety is of the utmost priority to consumers while shopping, small businesses’ failure to implement contactless tech was proving to be detrimental to the category. According to Visa’s recent Back to Business study: “Nearly half (48%) [of consumers] would not shop at a store that only offers payment methods that require contact with a cashier or shared machine like a card reader.”
As we’ve seen with trends in China, “revenge spending” is a phenomenon seen in several European and Asian countries. Americans are beginning to feel more financially secure, and contactless payments allow the beauty of minimising germ transmission at the checkout counter and speed up the payment process. These changes also mean fewer people waiting in line, allowing stores to enforce social distancing better and not get paralysed by store capacity limitations.
Mass Transit Ditches Metro Cards and Fuels Further Contactless Payment Use
Traditional turnstiles and the iconic MetroCard are no more in New York City subways. On December 31, the Metropolitan Transit Authority (MTA) announced their rollout with OMNY, a tap and go system to make fare payments. All New York City subway stations and buses in all five boroughs come equipped with this new system, and while the traditional MetroCard is still available to use, the MTA plans on phasing it out by 2023. Eliminating the swipe card means creating a speedier, easier, more convenient, and all-around better experience for New Yorkers.
When it comes to contactless technology on mass transit, New York City is behind compared to other states and countries. In 1997, Hong Kong introduced the Octopus card for Automated Fare Collection (AFC), since then, contactless smart cards have become the standard fare media in AFC systems.
In 1999, Washington D.C. introduced SmarTrip, a contactless stored-value card for public transit. In 2012, the Transport for London (TFL) implemented the tap-and-go Oyster Card, which exploded in popularity. In 2014, London allowed contactless banking cards to use upon public transit points of entry.
Today, several transit agencies are following TFL’s lead and switching to the concept of Bring Your Own Device (BYOD)—commuters can pay for transit using their bank card, mobile device or wearable that supports contactless payments. With the OMNY rollout, New York has leapfrogged to the most modern way of fare collection!
FinTech Startups are Creating More Solutions to Take Advantage of Contactless
With each passing day, it seems technology advances further and further. Contactless payment companies and others in the fintech space are innovating and working together for this growing need in our society. Contactless solutions are both beneficial for businesses, as well as consumers. Their use can be utilised and integrated beyond your everyday retailers and transit hubs.
Consider large sporting arenas and concert halls, who’s top priority for reopening and returning to normal will look at ways to avoid interactions where germs can spread between employees and the guests. Contactless technologies like Purewrist offer solutions for large events to streamline ticketing and purchases on site with integrations of tap-to-pay solutions.
We’re only seeing the beginning stages of how this mass adoption of contactless technology will continue to impact our everyday lives for the better. Small business, retailers, and transit hubs are to start, but now with new emerging technologies, we can bet on the next wave of tap-to-go anywhere to arrive at any moment.