The Future Is Contactless Payments
Before the coronavirus pandemic, it was mostly germaphobes who didn’t want to touch paper money and coins. Now all of that has changed, and with the U.S.’s recent coin shortage, businesses are encouraging consumers to use contactless payments. Even the Centers for Disease Control and Prevention (CDC) recommend using touchless payments whenever possible. Our smartphones have been equipped with the technology for some time, another feature that seemed beneficial but not necessary. These days... it’s necessary, allowing this growing industry to grow quicker and expand on its current contactless technology.
Fintech companies are going full force to invest resources into developing new contactless solutions that will protect consumers and businesses while also ensuring efficiency and business continuity. Contactless payments were met with some hesitation, with some countries not being on board with the technology. However, that changed quickly. Germany, for example, preferred cash payments. But with the pandemic, it encouraged its citizens to use contactless payments. Now more than half of the overall purchases made in the country are contactless. This shift could make cash an obsolete way of payment. I mean, of course there will be people who still use cash, but that percentage will decrease in the next decade.
You’re probably thinking, “Well, it’s not totally contactless payments,” since you still have to insert your card into a chip reader or tap a screen to confirm payment details. Point-of-sale (POS) terminals, the devices that process payments, have been designed to incorporate new technology so you can just hold your phone near the terminal to pay. With all technology, it takes some time for people to adopt it in their everyday lives.
Though some people can be resistant to change and new technology, as society shifts toward contactless payments because of COVID-19, they will become accustomed to it in time for terminals that employ full contactless technology. It can also be expensive for businesses to replace existing POS terminals, so they will need to take this emerging technology into consideration and budget for it. However, those changes in their budgets could be worth it and could even help retailers reduce transaction time, increase revenue, and shorten lines.
Change is inevitable. According to a recent Research and Markets report, the global market for contactless payments is expected to grow from $10.3 billion in 2020 to $18 billion in the next five years, which represents an 11.7% compound annual growth rate (CAGR). Even the Metropolitan Transit Authority (MTA) in New York has begun installing contactless payment systems in every station in the Bronx, and it plans to have them in every MTA station and bus by the end of the year. Additionally, people are using contactless cards for sanitation and speed purposes. According to a recent Entrust Datacard survey, 83% of its responders believe contactless cards are here to stay, and 61% believe that it's somewhat of a priority to have a contactless feature on credit or debit cards.
Obviously, this industry is expanding and new ways to pay without any contact are in demand, which has a lot of companies leading the way to major innovations to make contactless payments possible, convenient, and secure. Keep an eye on the stocks at the forefront of this industry, stocks like PayPal Holdings (NASDAQ: PYPL), Visa (NYSE: V), and Global Payments (NYSE: GPN). These companies are going full speed ahead and ensuring they provide the technology solutions that are needed for the future.
Until next time,