The COVID-19 pandemic has altered the way we live, work, and do business. The adoption of contactless payments is one of the key trends that have emerged during this time. Contactless payments have quickly become the preferred mode of payment for many consumers and businesses as people seek to reduce their exposure to germs and viruses.

In this article, we will look at the key characteristics of contactless payments, their benefits, and how they are transforming the payments industry.

What Are Contactless Payments?

Contactless payments enable customers to conduct transactions without physically touching a payment terminal. This is accomplished through the use of near field communication (NFC) technology, which allows two devices to communicate wirelessly when placed in close proximity to one another. Customers using contactless payments simply hold their mobile device or credit card near a payment terminal to complete a transaction.

The Advantages of Contactless Payments

There are numerous advantages to using contactless payments. First and foremost, they provide a quick and convenient method of conducting business. Customers no longer have to rummage through their wallets for cash or struggle with credit cards because all they need is their mobile device or contactless card.

Contactless payments are also more secure than traditional methods of payment. The card or mobile device never leaves the customer's hand with contactless payments, reducing the risk of card skimming and other forms of fraud.

Furthermore, many contactless payment providers provide fraud protection and other security features to ensure the safety and security of transactions.

Customers are more likely to make smaller purchases when they can easily pay with their mobile device or contactless card, which has been shown to increase transaction volumes. This is especially useful for small businesses that may lack the resources to accept traditional payment methods such as credit cards.

The Risks of Contactless Payments

Contactless payments while incredibly useful, especially following the COVID-19 pandemic, have their own inherent dangers.

We’ve highlighted 3 of the most common ones:

Security risks: Contactless cards are known to have CVM (Cardholder Verification Method) limit problems. This happens due to how their signatures and PIN verifications are usually not required when under a certain amount. As the current CVM processes stand, they leave the door open to possible theft or fraud.

Data Privacy Concerns: in what concerns data privacy, contactless systems collect both user data as well as data about their transactions.

Unauthorized access to the cardholder’scardholder’s personal information: once again, the main issue surrounding data seems to be linked to how without user consent, it seems that personal information or personally linked information can be attained.

RFID tags, for example, seem to be the usual go-to method for hackers as they can be attached to many objects and allow them to remotely steal money via contactless card readers which scan bank cards.

Reportedly, these devices can be homemade and act as PoS terminals which allow hackers to access the card holder’s account.

As such, hackers need only to be roughly 7 to 10 inches from their victims in order to start transferring and receiving signals. In a crowded area, scanning bank cards from unsuspecting victims becomes especially easy.

In the Post-COVID Era, Contactless Payments

As people seek to reduce their exposure to germs and viruses, the COVID-19 pandemic has accelerated the adoption of contactless payments. According to a recent Mastercard survey, 79% of respondents are now using contactless payments, and 74% plan to continue using them even after the pandemic is over.

This trend toward contactless payments has been particularly noticeable in the retail sector. Many retailers have embraced contactless payment methods, with some even providing exclusive discounts to customers who use contactless payments.

Contactless payments have become the norm in the hospitality industry, with many restaurants and cafes using QR codes to allow customers to order and pay for their meals without having to touch a physical menu or payment terminal.

Government regulations have also influenced the adoption of contactless payments. In some countries, such as the United Kingdom, the contactless payment limit has been raised in order to encourage their use and reduce the need for physical contact.

This trend is likely to continue as governments and regulatory bodies seek to support the growth and adoption of contactless payments.

Contactless Payments in the Future

The use of contactless payments is likely to continue long after the COVID-19 pandemic is over. People will continue to seek out businesses that accept contactless payments as they become more comfortable with them.

Businesses that are quick to adopt contactless payments and provide a seamless, secure, and convenient payment experience for their customers will gain a competitive advantage.

The rise of contactless payments also presents opportunities for payment industry innovation and growth. Payment providers are already experimenting with new technologies, such as wearables and biometric authentication, to improve the contactless payment experience and provide even more security and convenience.

Furthermore, the use of blockchain technology and cryptocurrencies has the potential to revolutionize the payments industry by providing businesses and consumers with even more secure, transparent, and cost-effective payment options.

The developing world is another potential growth area for contactless payments. Contactless payments can provide a simple and secure way to make transactions in countries where many people do not have access to traditional banking services.

In fact, contactless payments are already being rapidly adopted in many emerging markets, with some experts predicting that they will become the primary form of payment in these regions in the coming years.

However, there are some issues that must be addressed before contactless payments can reach their full potential. One of the most difficult challenges is ensuring that all businesses have access to contactless payment technology and the infrastructure. This is especially true for small businesses, which may lack the funds to purchase new payment terminals or upgrade their systems.

Another challenge is keeping contactless payments secure and protected from fraud. While contactless payments are more secure than traditional payment methods in general, they are not impervious to fraud.

To ensure that transactions are safe and secure, payment providers will need to continue investing in new security technologies and collaborating closely with businesses.

Conclusion

Contactless payments are a key trend in the post-COVID era, offering consumers and businesses a quick, convenient, and secure way to conduct transactions. Contactless payment adoption is expected to increase in the coming years, owing to factors, such as government regulations, changing consumer preferences, and the rise of new technologies.

However, there are still issues that must be addressed before contactless payments can reach their full potential, such as improving access to technology and infrastructure and ensuring that transactions remain secure and fraud-free.

As the payments industry evolves, businesses will need to stay current on the latest trends and technologies in order to provide their customers with the best possible payment experience.

Those who are quick to adopt contactless payments and other innovative payment solutions will have the best chance of success in the rapidly changing payments landscape.