The following is a quick primer on contactless payments, what they are, recent drivers of acceleration, and what might happen next. We hope the following answers some questions and just as importantly, spurs more questions as to how you can use these technologies to better engage with your customers.
Contactless payments are made up primarily of two (2) technologies
In both cases above, NFC is a clear technology driver of contactless, tap-n-go/tap-n-pay capabilities. Established in the 2002-2003 timeframe, NFC is a close contact or “proximity” form of Radio Frequency ID (RFID).
Because NFC is a wireless data communication protocol, increases in wifi and data communication speeds has helped facilitate ease and consistency of the NFC payments. Additionally, encryption and tokenization are used during NFC payment transactions. The most well-known form of NFC payment is probably Apple’s “Apple Pay”, using Apple’s smartphone wallet technology.
Unlike NFC payments which can be accessed via a NFC credit card or through a smartphone’s digital/mobile wallet, QR code payments are accessed or delivered solely on mobile devices. A QR code can be generated as a payment identifier (static or dynamic) and scanned for payment at POS, or can be served up by the POS or ecommerce system as payment due, where the user scans the QR code with a mobile application like PayPal (provided the POS/ecommerce system accepts the mobile payments application - in this example, PayPal). This method of payment is the dominant form of mobile payments in China, due to ease of acceptance.
Contactless payments have benefits for both consumers and retailers including:
For business considering where investments should be allocated, let’s look at some stats:
While recognizing we have rapid trend growth in mobile payments, 4 in 10 smartphone users have used a contactless payment at least once (statista 2021). eMarketer-Insider Intelligence (3/2021) expects greater than 1 in 2 smartphone users will adopt mobile proximity payments by 2025.
So how do you accelerate usage and take advantage of this huge mobile opportunity? Reward and incentivize -
- Federal Reserve Bank of Philadelphia, May 2020
From mobile wallets, mobile shopping carts to completely integrated rewards, mobile apps, F&B and Retail POS systems, IMS has the tools, technologies, and experience to help you take advantage of these latest trends.