Point of sale system

The Shift to a Contactless Shopping Experience

Commerce has always relied on technology to help make the shopping experience easier, faster and more secure for both sides of every transaction. Scales allowed ancient buyers and sellers to verify weights when trading and bartering, the introduction of credit cards allowed consumers to purchase items and to carry a monthly balance forward and e-commerce has enabled consumers to shop online from the comfort of their own homes. The marriage between technology and commerce has only become stronger since the rise of contactless payments.

What exactly are contactless payments and what role do they play in improving the shopping experience for customers and businesses?

What is a Contactless Payment?

Online shopping, mail ordering, phone ordering and in-app purchases all feature variations of “contactless payments,” since customers can pay for items remotely without coming into direct physical contact with sellers. However, the term more specifically applies to in-person shopping in which both sides of a transaction use wireless technology to conduct their business.

Most of these transactions rely on a short-range radio technology, known as near field communication (NFC), to create a wireless link between a customer’s debit or credit card and a merchant’s point-of-sale (POS) terminal.

When it’s time to check out, the merchant rings up the sale on their NFC-enabled POS reader. The customer waves their NFC-enabled credit or debit card across the terminal to initiate a sale with no PINs, swipes or dips required. Since most credit cards have dropped their signature requirement, there’s also no need to sign any receipts.

It’s also possible for customers to use smartphones or wearable technology such as Apple Watches if they’ve uploaded their credit card details into their devices’ mobile wallets. The checkout process is basically the same, except that users must unlock and access their mobile wallets before waving their smartphones across the merchant’s POS reader.

Why Are Contactless Payments on the Rise?

Near field communication isn’t new. The University of Washington and the Federal Trade Commission (FTC) hosted a town hall meeting in 2008 for industry members to discuss contactless payment systems and Google introduced its version of a mobile wallet just a few years later.

Over time, the technology has grown in popularity due to a variety of factors, including:

  • Speed: Contactless payments are up to 10 times faster than traditional payment methods such as credit cards, checks and cash. This means shorter lines for customers and more sales per hour for merchants.
  • Convenience: It’s easier to wave a credit card or mobile device than it is to go through the hassle of dipping chips, signing receipts or entering PINs.
  • Security: Contactless payments initiated via mobile wallets offer enhanced fraud protection since transactions can only go through once a user has unlocked their device and accessed the mobile wallet – both of which require multiple authentication steps.

However, contactless payments became even more popular in 2020 largely due to growing concerns about disease transmission during the COVID-19 pandemic. Many brick-and-mortar stores lost ground to traditional e-commerce due to lockdown restrictions, store capacity limits and the public’s diminished desire for any type of shopping that involves touching or being around groups of people.

In cases where in-person transactions were unavoidable, contactless payments increasingly became the default standard. This trend is most noticeable among grocery stores, where a majority of contactless payments happened during 2020. Research shows that 85% of consumers that currently use mobile wallets plan to continue making payments this way for the foreseeable future.

The contactless payments shift started well before COVID-19. In 2021 and beyond, it is likely the technology will become even more mainstream not just within retail, but across all aspects of face-to-face commerce.

To better understand how commerce is shifting to contactless payments and what steps you can take to prepare yourself for this type of transaction in the future, check out the Clover Network, a leader in the creation of smart, customized POS systems. You can also find more information from the Clover Network from this attachment.

Author Bio

Mihir Korke is Head of Acquisition at Clover Network, a leader in small business credit card processing and POS systems. Clover specializes in restaurant, retail, and personal and professional service payment solutions. With desktop and mobile POS systems, contactless payments, solutions for curbside pickup and online ordering, loyalty and rewards, Clover has multiple solutions to meet your business’s needs.

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