How Contactless Payment is Growing in 2021

Posted by Christina James on September 28th, 2021

Contactless payment transactions were already a booming industry even before the Covid-19 outbreak. However, it has experienced rapid and robust growth since the pandemic. The reason for this is quite obvious. The ongoing CoronaVirus outbreak has made physical distance the new normal, leaving people with no choice but to gravitate towards contactless payment options.

People are increasingly adapting to newer digital technologies such as online money transfer apps that enable them to make cash payments online. We can safely say that the pandemic has had a positive impact on this market. There has been a paradigm shift in people’s shopping behaviours, especially because of the rising penetration rate of smartphones. Everything is digital and has a strong online presence now.

This write-up will demonstrate how contactless payment is growing in 2021 and how it impacts the mobile payment market and its competitive landscape. We will also discuss the top nine trends that got picked up in the industry in the wake of its gaining acceptance amidst the pandemic.

An Overview of the Global Contactless Payment

These days more and more people prefer seamless payment modes for many of their daily transactions. Many banks and card issuers are currently adding contactless modes of payment to their services. Customers are increasingly encouraged to adopt these services that provide growing convenience and speed. Moreover, these solutions are also widely deployed by various businesses and are expected to drive exponential market growth.

According to recent research, the global contactless payment industry values at 1.34 trillion as of late 2020. It is only expected to evolve more due to the increased adoption of online payment software across the globe. The consumer shift from cash to cards has increased dramatically; a surge of 20% has been reported in the number of online transactions worldwide. In the US alone, an increase of 70% has been reported.

Mobile apps have played a crucial role in promoting contactless payment, and customers love it as it is a practical, fast and straightforward mode of payment. It has spread wings to multiple utility payments such as electricity and gas bills, mobile phone recharges, and other day-to-day transactions. This mode of payment is everywhere and gives value to all stakeholders, including banks, retailers and consumers.

Top Nine Digital Payment Trends in 2021

Here are the top nine digital payment trends in 2021 that you need to know:

1. Buy-now-pay-Later: During the pandemic, people pivoted to BNPL or Buy-now-pay-Later payment methods which are otherwise known as digitally deferred payments. The goal is to remove all kinds of friction around payments, and merchant adoption of such payment modes has effectively met customer demands.

2. Mobile wallets: Digital payment modes like mobile wallets have been around before the Covid-19 outbreak; however, the apps received more traction once the pandemic hit, limiting physical contact while making payments. Card issuers want to tap into the benefits of the mobile wallet as they enjoy benefits such as higher usage, high credit balance, etc.

3. Embedded payments: As more customers shop online, digital payments through e-commerce channels surged exponentially. The embedded payment methods are quite popular as retailers strengthen their e-commerce presence even in small scale sectors.

4. Real-time payments: Real-time payments and Automated Clearing House (ACH) transactions are known to be quick and efficient. Many people pivot to Peer-to-peer (P2P) apps because the funds can be accessed and received immediately.

5. Cross-border payments: Cross-border payments grew steadily as cross-border purchases surged. Most businesses are looking to reduce the friction caused by cross-border transactions, and giants such as Visa, Mastercard, and MoneyGram are offering services to facilitate this type of transaction better.

6. Mobile point of sale (mPOS): As for now, merchants are also going mobile in accepting payments via mPOS systems regardless of the physical location of their business.

7. EMV technology: This technology has greater security as it uses codes that vary each time a transaction occurs.

8. Biometric authentication: Biometric signals such as fingerprint, facial and even heartbeat recognition power this authentication mode for contactless payment. For instance, Apple devices utilize fingerprint or FaceID as part of their existing payment authentication.

9. Frictionless payment: Contactless payments via NFC, QR, etc., also enable digital payments even in-person or online without the need for any physical contact.

Conclusion

People are digitally connected now more than ever, and this type of digital literacy paves the way to a robust, economical infrastructure. We are witnessing changing consumer behaviour patterns as customers prefer retailers that offer digital payment choices. More and more businesses are recruiting developers to create software such as mobile wallet app development, which puts them ahead of the curve. However, it is also imperative that we try and regulate these digital payments. These online transactions are susceptible to fraud despite the great security measures. Therefore, it is vital to upgrade security protocols to avoid such transaction mishaps continuously.