3 Reasons Why Contactless Technology is Gaining Momentum
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Banking sector was one of the first to embark on a digital journey. With the goal of delivering convenient transactions to customers, banking industry never shied away from new technology and latest innovations. Facilitating door-step transactions and eliminating the need to physically visit a bank, the banking industry is riding high on the digital transformation wave. There has been a 360-degree evolution of banking services from cash-based transactions to cashless payments. Amidst all these changes, one thing that has remained constant and has been catalyzing this metamorphosis is customer satisfaction and convenience. Driven by this very factor, contactless payment technology is emerging as a new way of transacting money.
An upgrade to the existing debit and credit cards, contactless technology is equipped with Near-field communication (NFC) chips that employ radio frequency identification to process a payment. The contactless payment technology removes the requirement to swipe the card or enter a pin. It simply requires proximity to the NFC equipment for the payment to get initiated in a highly-encrypted manner. Contactless technology is not limited to the plastic cards only. It is also extended to mobile wallets and smart wearable devices. Apple and android manufacturers are releasing upgraded phones embedded with the NFC-enabled chip to keep up with the shifting banking scenario. The recently launched Apple Pay, Apple Card as well as Google Pay are among the many options of this blooming technology.
Popularly known as the ‘tap-and-pay’ method, contactless technology is expected to drive almost $190B in sales with number of proximity mobile payment users growing to approximately 75 Million in the U.S. by 2022. In addition to being a propagator of smooth, hassle-free transactions, contactless technology opens up wider avenues for the wearables and smartphone industry. The contactless payment solutions have just started to gain acceptance in the U.S. market, while other countries such as UK and Australia have been using the technology since years. Let us look at the three key reasons that are spearheading the popularity of contactless payment methods.
- The need for speed
Speed is one of the main attractants of the contactless payment technology. The faster transactions backed by contactless solutions can help brick-and-mortar stores regain their customers who diverted to ecommerce platforms due to the long queues and slow checkouts at physical shops. By removing the friction at the point of sale, the contactless payment method optimizes transaction speed and allows businesses to serve more customers in a shorter frame of time. Contactless payment can effectively reduce the average time spent at a POS terminal by 30 to 40%, thus, making it a preferred choice among businesses and customers alike. The exponential rise in the number of contactless cards across the U.S. reflects the digitally-inclined user behavior demanding faster pace, higher efficiency, and greater security.
As per Bob Legters, Chief Product Officer of payments and banking product lines at FIS, “Contactless is a stepping stone into a digital interaction, and it’s changing the way you interact with the POS.” As of now, 70% of the POS terminals are now contactless-enabled and are performing 50% of the card transactions. Bob believes that implementation of contactless card can go live in as little as four to six weeks, and presses on the need to take the first step towards its adoption right now.
- Convenience is the ultimate driver
MetroRio, the Brazilian transit operator which runs the Rio de Janeiro Metro, has partnered with Visa, Banco do Brasil, Bradesco, and Cielo, and launched contactless transit ticketing system supported by the Visa Secure Access Module (SAM) technology. MetroRio president Guilherme Ramalho said, “MetroRio’s goal is to innovate to make the lives of our customers easier”.
In the modern dynamic business scenario, customers demand a smooth-sailing experience at every step of the way. Customers today keep their convenience above all and choose their preferred service provider based on that. Having this in mind, businesses today need to take a pragmatic approach while developing innovative solutions for their end users. Contactless technology epitomizes this strategy by obliterating queues and supporting quick transactions for imparting the best-possible experience to the customers.
- Safety and security above all
Contactless payment technology shortens the average length of a transactional process by reducing the number of total steps involved. As it does not require input of pin or a password, contactless technology has raised questions on the safety of user privacy, which was the primary source of skepticism hindering the widespread adoption. However, if reports are to be believed, the contactless payment solutions are less vulnerable than the prevalent card-based payment methods. Since, there is no need to transmit the user information to the POS terminal, the contactless technology makes for a more secure payment option.
The data transmitted during a contactless payment is encrypted, which makes its counterfeiting next to impossible for fraudsters. Many contactless payment networks also provide the provision for additional security verification such as biometric authentication, thus, ensuring a completely walled transactional ecosystem.
Incorporation of cutting-edge technology such as contactless payment solutions enable banks and businesses in general to strengthen their market position and deliver value-based services to the consumers. The responsibility for the successful implementation and continued growth of the contactless technology momentum relies on optimally performing duo of the involved software and hardware. The POS terminals need to be updated and maintained to be aligned with the NFC-enabled equipment. The performance and functionality of the infrastructure should be guaranteed with proactive software quality assurance and quality engineering. The technology should be identified for any vulnerability gaps and necessary measures should be taken before deployment. The sensitivity of involved data makes it all the more important that the deployers take a microscopic approach for detection of any issues and sort them out well in advance.
Cigniti’s dedicated Banking Domain Competency Group (DCG) furthers our thought leadership in the Banking application testing. It facilitates effective delivery through an experienced pool of top-quality test consultants who are industry SMEs and certified professionals. Cigniti’s dedicated DCGs concentrate on the training and development of resources within these domains to ensure the highest standards of quality. More than 50% of our testing professionals are Certified Software Testing professionals with CSTE and ISTQB, and are equipped with relevant Industry certifications while having in-depth domain expertise.