The New Era of Contactless payment :How Tap and Pay is Transforming the Way We Buy Things
The New Era of Contactless payment :How Tap and Pay is Transforming the Way We Buy Things
Blog Article
Contactless payment technology has seen tremendous growth in recent years. This tap-andpay method allows customers to simply wave their credit or debit card or mobile device near a payment terminal to complete transactions for amounts under $100. The underlying radiofrequency identification (RFID) technology has been around for decades but is now being widely adopted for retail payments. A key development that drove mainstream adoption was the introduction of European Contactless payment standard EMV Co's "PayPass" in 2006. This set a common set of technical specifications for contactless cards and terminals across different payment brands like Visa, Mastercard, American Express.
Within a few years, major banks started issuing contactless-enabled credit and debit cards that supported PayPass. On the merchant side, payment terminal manufacturers built PayPass acceptance into their new products. Retailers also sought to enable contactless acceptance, seeing it as a way to speed up transactions. By 2010, Contactless payment were gaining steam in Europe and parts of Asia. In recent years, their use has accelerated further with new contactless-friendly implementations of Apple Pay, Google Pay, and Samsung Pay that allow customers to pay using their smartphones and smartwatches instead of physical cards.
The Growth of Contactless in the United States
The United States was initially slower than other regions in adopting contactless technology. However, over the past five years, it has seen tremendous growth. A big push came from payment networks who wanted a common standard for facilitating both in-person and mobile contactless use cases. In 2015, they launched "Contactless, Contactless Lite and Digital Secure Messaging" specification based on EMV Contactless specifications to drive broader contactless acceptance in the US.
This provided the foundation for large-scale rollouts of contactless cards by major US banks starting in 2016. Brands like Chase, Citi, and copyright began issuing new credit and debit cards with built-in PayPass or similar contactless capabilities. On the merchant side, payment terminal manufacturers configured their latest products for contactless acceptance. Retailers including Walmart, Target, CVS, and others upgraded their point-of-sale (POS) infrastructure as well.
By late 2010s, over half of all Visa and Mastercard credit cards in circulation in the US were contactless-enabled. More than 1 million merchant locations accepted payments. The COVID-19 pandemic further accelerated the rise of contactless in the US, as consumers sought the tap-and-pay option to avoid closely interacting with payment terminals and cash. Today, it is one of the fastest-growing ways US consumers pay for both in-store and online purchases.
Benefits
There are several advantages driving rising customer adoption of it worldwide:
Speed and Convenience - Contactless transactions take just a few seconds compared to inserting a card into a chip reader and waiting for authorization. This saves time at checkout lines.
Hygiene - During the COVID times especially, customers prefer tapping cards over handling cash or entering PINs on shared payment devices.
Security - Dynamic security codes make each contactless transaction unique. Stolen contactless details cannot be used for unauthorised in-person payments. Cards also have transaction limits per tap.
Tokenization and Digital Wallets - Solutions like Apple Pay generate single-use codes ("tokens") for each transaction rather than transmitting actual account details. This adds extra security for mobile payments.
Transit applications - Many cities allow commuters to pay for public transit using contactless bank cards or mobile wallets like Apple Pay, providing a convenient alternative to cash.
Global Acceptance - With EMV global standards, Contactless payment work seamlessly across countries, allowing travelers to pay using familiar cards or devices wherever they go.
Growing Role in Everyday Purchases
Initially, contactless was mainly used for small dollar transactions like transit fares, coffee and sandwiches. But it's use is rapidly expanding into broader retail categories:
Grocery stores have heavily invested in contactless POS technology, allowing customers to pay without unpacking wallets at checkout. Major chains see it increase average basket sizes.
Gas stations saw rising contactless use during the pandemic, since drivers could pay without re-entering the store. Several chains launched pay-at-pump contactless acceptance.
Department and clothing stores enable contactless across the entire store, letting shoppers purchase larger baskets without card inserts or signatures. Some provide contactless selfcheckout lanes.
Dining establishments allow Contactless payment at tableside devices, speeding bills without waiting for servers. Many quick service restaurants add contactless as an additional option to drive through lanes.
The growth in use cases shows how contactless is transforming routine purchasing across all store formats and price points. With its ease and speed, it has potential to replace cash and cards for most retail payments globally within this decade. The technology preserves payment security while streamlining customer experiences, appealing to both merchants and customers.
Contactless is at the forefront of an ongoing digital transformation in payments. Its broad acceptance globally has been driven by benefits in speed, hygiene and convenience along with evolving security capabilities. With continued infrastructure investments and proliferation of contactless-friendly digital wallets, it will likely become the default way consumers pay across both in-store and remote commerce venues. While implementation is ongoing, contactless clearly represents the future of retail payments globally.
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About Author:
Vaagisha brings over three years of expertise as a content editor in the market research domain. Originally a creative writer, she discovered her passion for editing, combining her flair for writing with a meticulous eye for detail. Her ability to craft and refine compelling content makes her an invaluable asset in delivering polished and engaging write-ups.
(LinkedIn: https://www.linkedin.com/in/vaagisha-singh-8080b91)
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