Contactless payments set to boost business as Covid-restrictions ease

The world has been slowly shifting towards a cashless society. In fact, with retailers rapidly investing in digital payment methods for time-poor shoppers, who demand speed and efficiency at the check-out, we’ve seen cash payments decline from 58% in 2009 to 23% a decade later. Fast forward, and the Covid-19 pandemic has disrupted the world of payments even further. A year on since the first of three lockdowns, consumer demands for touch-free and more hygienic ways to pay have accelerated the need for contactless payment solutions and led regulators to double the spending limit per transaction to £100.

Over the past year, people have adapted their buying habits with 54% of UK consumers having tried a new payment method. They have become used to the ease and simplicity of paying via their mobile, watch or even key fob, and with a return to normality on the horizon as Covid restrictions begin to ease, this demand for efficiency will inevitably extend beyond retailers into pubs and restaurants. As a result, it’s clear that businesses must adapt accordingly if they hope to keep up with growing customer expectations.

‘Tap and pay’ to success

 Pre-pandemic, contactless card payments already accounted for more than 40% of all card transactions in the UK. As the virus spread and public concerns for safety rose, so too did ‘tap and pay’ at the till. According to Barclaycard, contactless payments rocketed last year to make up almost 90% of all card transactions.

With more than 136 million contactless cards in the UK in 2020, the number of contactless cards in circulation now exceeds that of contact cards – and the evolution is showing no signs of slowing down. UK cash usage is now declining the fastest of any of Europe’s major economies, plummeting by almost 40% in 2020 due to Covid-19 and the rush for digital payments.

As we look to the future, contactless payments will open the door to new opportunities and innovations using the technology in wearable devices such as rings and wristbands. Fintech companies will continue to invest resources in developing new contactless solutions that will deliver convenience, speed and security for customers and businesses. 

A win-win for all stakeholders

The decision to raise the contactless spending limit to £100 is a clear win for customers, who will now be able to use their contactless cards to make bigger purchases than ever before. But it’s also a big step forward for all stakeholders. For issuing banks, the increase in the contactless cap will mean more revenue as customers tend to carry out more low-value transactions by card than cash. While for retailers, a faster check-out, greater security due to less cash management and improved customer experience because of less queuing, will lead to a rise in revenue.

Almost all businesses have felt the devastating and costly effects of Covid-19. Now, as restrictions finally begin to lift, there’s an opportunity to make the most of an unprecedented demand from consumers desperate to return to retailers and the hospitality industry. A total of £8.4bn was spent on contactless credit and debit cards across the UK in August 2020, when there were fewer coronavirus-related restrictions. As shops, beauty salons and pubs begin to reopen from April 12, in-store consumer spending will climb as the year progresses, and all businesses should invest in contactless payment technology to reap the benefits of this unparalleled demand.

Built in security to keep criminals out

While there has been rapid progression towards a cashless society – sped up by the pandemic – security concerns have held some people back from this change. That’s why contactless payment technologies can offer a solution with biometric security built into some technologies. For instance, a brand new biometric payment card offers the convenience of a contactless payment with no spending limit as it immediately authenticates the owner with a fingerprint sensor on the card itself – making it as secure as typing in a personal PIN code. What’s more, mobile devices, which require a fingerprint or facial identification, have become the fastest growing payment method at point of sale and are expected to account for £125 billion worth of sales on the UK high street by 2024.

It is also practically impossible to clone a contactless card, use a long-range reader to extract its data or even collect enough to complete an online purchase. With smart microprocessor chip technology contactless cards are infinitely less vulnerable to counterfeit fraud than magnetic stripe cards.

As we now work our way out of lockdown, this payment technology will only continue to soar. By raising the limit for contactless options, banks will not only improve the customer experience but allow businesses a chance to thrive in such a pivotal time. Now is the moment to invest in this technology and make the most of the returns.