As the world continues to grapple with the COVID-19 pandemic, the use of contactless payments has become more prevalent than ever before. From groceries to transportation and everything in between, consumers are increasingly opting for contactless payment methods to minimize physical contact and reduce the risk of infection.
In fact, according to a recent report by Juniper Research, the global value of contactless transactions is expected to exceed $6 trillion by 2024. This is a staggering increase from the $2 trillion recorded in 2020, highlighting the rapid adoption and growth of contactless payments in the global economy.
In light of this growing trend, businesses and consumers alike must keep an eye on the latest contactless payment trends. In this blog, we will explore the top 7 contactless payment trends to watch out for in 2023.
Real-time payments: Paving its way in contactless payments
Real-time payments refer to the ability to transfer funds between two parties instantly, 24/7, and in a highly secure manner.
This latest digital payment trend in contactless payments is poised to revolutionize the way businesses and consumers exchange money, as it offers several advantages over traditional payment methods.
Here are some points to describe real-time payments as the latest trend in contactless payments in 2023:
Instant transactions
Real-time payments allow for instantaneous transfer of funds between two parties, eliminating the need for waiting periods associated with traditional payment methods like checks and wire transfers.
24/7 availability
Real-time payments can be initiated and received at any time, including weekends and holidays, providing users with round-the-clock access to their funds.
Secure
Real-time payments are highly secure, utilizing advanced encryption technology to protect sensitive financial information and prevent fraud.
Low transaction fees
Real-time payments typically come with lower transaction fees compared to traditional payment methods, providing cost savings for both businesses and consumers.
Increased efficiency
Real-time payments offer increased efficiency for businesses, enabling faster payment processing, improved cash flow management, and reduced administrative costs.
Enhanced customer experience
Real-time payments provide a seamless and convenient payment experience for customers, enhancing customer satisfaction and loyalty.
Integration with other technologies
Real-time payments can be easily integrated with other contactless payment technologies like digital wallets and mobile payments, providing users with a comprehensive and seamless payment experience.
Biometric payments: Boosting Payment and Security For Contactless Payments
Biometric payments have emerged as the latest trend in contactless payments, providing a seamless and secure payment experience to customers.
Biometric payments utilize unique physical and behavioral characteristics of individuals such as fingerprint, iris, face, voice, and signature to authenticate transactions.
With the increasing use of contactless payments, biometric technology is becoming more prevalent as it offers enhanced security and convenience.
Here are the top ways biometric payments are boosting payment and security for contactless payments in 2023:
Enhanced Security
Biometric payments offer an added layer of security by requiring a unique biological identifier to authenticate a transaction.
This eliminates the need for traditional authentication methods like PINs and passwords, which can be easily compromised, thereby enhancing the security of digital payments.
For instance, Apple Pay uses facial recognition technology to authorize payments, making it more difficult for fraudsters to access a user's account.
Read more: Biometric technology - Enhancing security in digital payments
Faster and More Convenient Transactions
Biometric payments eliminate the need for users to carry physical cards or remember passwords, making transactions faster and more convenient.
With a simple touch or scan of their biometric data, users can complete transactions within seconds.
For example, Amazon Go uses facial recognition technology to allow customers to enter the store, grab what they want, and walk out without ever pulling out their wallets.
Improved Customer Experience
Biometric payments provide a frictionless and personalized experience for customers.
By using biometric data to verify identities, businesses can offer customized offers and promotions to their customers based on their shopping behaviors. This enhances the overall customer experience and increases loyalty.
Reduced Fraud and Chargebacks
Biometric payments offer a higher level of security, reducing the risk of fraud and chargebacks for merchants.
As biometric data is unique to each individual, it is much harder for fraudsters to replicate or steal it. This translates to a reduced number of fraudulent transactions and chargebacks for merchants.
QR Code Payments: The Fastest and the Most Efficient Payment Method
QR code payments have emerged as the latest trend in contactless payments, providing a fast and efficient payment experience to customers.
QR codes can be easily scanned with a smartphone camera, eliminating the need for physical cards or cash.
With the increasing popularity and the impact of contactless payments in retail, QR code payments are becoming more prevalent as they offer an easy and secure way to make transactions.
Here are the top ways QR code payments are the fastest and most efficient payment method in 2023:
Simple and Convenient
QR code payments are simple and convenient, requiring only a smartphone camera to scan the code.
This eliminates the need for customers to carry cash or cards, making transactions fast and hassle-free.
For instance, in China, QR code payments are used extensively for everything from buying groceries to paying for public transportation.
Faster Transactions
QR code payments are faster than traditional payment methods, as they eliminate the need for manual entry of payment information.
This results in shorter checkout times, making it easier for businesses to process a higher volume of transactions.
For example, Starbucks has adopted QR code payments in their mobile app, allowing customers to order and pay for their drinks ahead of time, reducing wait times.
Increased Security
QR code payments offer increased security by encrypting payment information, making it harder for fraudsters to intercept and steal customer data.
This protects both the customer and the business from financial loss due to fraudulent activities.
Additionally, QR codes can be set to expire after a certain period, reducing the risk of unauthorized use.
Cost-Effective
QR code payments are cost-effective, as they do not require any additional hardware or software to be installed.
This makes it easy for small businesses to adopt this payment method, without incurring additional expenses.
Additionally, QR code payments reduce the need for cash handling, which reduces the risk of errors and theft.
Read more: All you need to know about QR Code Payments
Digital Wallets: The All-in-One Solution For Contactless Payments
A digital wallet is an advanced payment solution that stores payment information securely on a smartphone or other digital device, allowing customers to make purchases without the need for physical cards or cash.
With the increasing popularity of contactless payments, digital wallets are becoming more prevalent as they offer convenience and security.
Here are the top ways digital wallets are the all-in-one solution for contactless payments in 2023:
Convenience
Digital wallets offer convenience by allowing customers to store multiple payment methods in one place, eliminating the need to carry multiple physical cards.
This makes transactions fast and hassle-free, as customers can simply tap their device to make a payment.
For example, Google Pay allows customers to store their credit and debit cards, loyalty cards, and gift cards, all in one place.
Enhanced Security
Digital wallets offer enhanced security by using encryption and tokenization to protect customer data.
This reduces the risk of fraud and theft, as payment information is stored securely on the device and not shared with merchants during transactions.
Additionally, many digital wallets require biometric authentication, such as fingerprint or facial recognition, to further protect against unauthorized access.
For instance, Samsung Pay uses iris scan technology to authenticate transactions, making it more secure than traditional payment methods.
Read more: Biometric technology - Enhancing security in digital payments?
Loyalty and Rewards
Digital wallets offer loyalty and rewards programs, allowing customers to earn points and discounts for their purchases.
This enhances the customer experience and increases loyalty to the business.
For example, Apple Wallet offers the ability to store and use reward cards, coupons, and tickets, making it a one-stop shop for all loyalty and rewards programs.
Contactless Payments for Public Transport
Digital wallets offer a contactless payment option for public transportation, allowing customers to tap their devices to pay for fares.
This eliminates the need for physical tickets or smart cards, reducing wait times and improving the overall customer experience.
For instance, Transport for London accepts digital wallets such as Apple Pay and Google Pay for contactless payments on their public transportation system.
Embedded lending and Buy Now Pay Later: The New Normal in Contactless Payments
Embedded lending refers to the integration of lending services into the payment process, while BNPL allows customers to defer payment for their purchases.
These payment options are becoming increasingly popular as they offer convenience and flexibility to customers.
Here are the top ways embedded lending and BNPL are the new normal in contactless payments for 2023:
Flexibility
Embedded lending and BNPL offer flexibility to customers by allowing them to choose how and when they want to pay for their purchases.
Customers can choose to pay in installments over time or defer payment altogether. This makes purchases more affordable and accessible to a wider range of customers.
For example, PayPal Credit offers customers the ability to pay for their purchases over time, with no interest if paid in full within a certain period.
Integration
Embedded lending and BNPL are integrated seamlessly into the payment process, making it easy for customers to choose these payment options at the checkout.
This reduces the need for customers to apply for credit separately, streamlining the payment process and improving the overall customer experience.
For instance, Afterpay is a popular BNPL service that is integrated into the checkout process of many online retailers, making it easy for customers to defer payment for their purchases.
Access to Credit
Embedded lending and BNPL provide customers with access to credit, without the need for a traditional credit card.
This expands the customer base for businesses and provides more options for customers who may not qualify for a traditional credit card.
Additionally, some embedded lending services offer credit-building opportunities, helping customers to establish or improve their credit history.
For example, Klarna offers a credit-building service that allows customers to make small purchases and pay them off over time, building their credit history in the process.
Increased Sales
Embedded lending and BNPL can lead to increased sales for businesses, as customers are more likely to purchase if they have flexible payment options. This expands the customer base and can lead to repeat business.
For instance, Shopify has integrated Afterpay into its platform, allowing businesses to offer BNPL options to their customers, leading to increased sales and customer satisfaction.
Promoting Data Standardization and interoperability through ISO 20022
ISO 20022 is a universal language for financial messaging that is used globally, providing a standardization framework for data exchange.
Here are the top ways that promoting data standardization and interoperability through ISO 20022 is the latest trend in contactless payments for 2023:
Improved Efficiency
Standardization through ISO 20022 allows for more efficient and streamlined payment processing.
With a common language for financial messaging, data can be exchanged more quickly and accurately, reducing errors and delays. This leads to faster payment processing and improved customer satisfaction.
For example, the European Payments Council (EPC) has adopted ISO 20022 for cross-border payments, leading to improved efficiency and reduced costs.
Increased Interoperability
ISO 20022 promotes interoperability between different payment systems and networks. This allows for seamless integration between different payment systems, enabling customers to make payments across multiple platforms and networks.
This makes it easier for customers to make payments, regardless of the payment method or system they are using.
For instance, the Federal Reserve has adopted ISO 20022 for its Fedwire Funds Service, promoting interoperability with other payment systems.
Enhanced Security
Standardization through ISO 20022 can enhance security in the payment process. With a standardized language for financial messaging, it is easier to detect and prevent fraudulent activity.
Additionally, ISO 20022 includes data fields for additional information, such as KYC (know your customer) and AML (anti-money laundering), which can improve security and compliance.
For example, SWIFT has adopted ISO 20022 for its payment messaging, promoting enhanced security and compliance.
Global Adoption
ISO 20022 is being adopted globally, making it a universal standard for financial messaging. This promotes consistency and standardization across different payment systems and networks, reducing the need for customization and reducing costs.
Additionally, global adoption can lead to increased innovation and collaboration, as companies work together to improve the payment process making the future of contactless payments brighter.
For instance, the Bank of Japan has adopted ISO 20022 for its payment system, promoting global adoption and standardization.
In-App Payments: The Most Convenient Way to Pay
In-App Payments are becoming the most convenient way to pay, making it one of the latest trends in contactless payments for 2023.
With the increasing use of smartphones, consumers are increasingly turning to in-app payments for their convenience and security.
Here are the top ways that in-app payments are the latest trend in contactless payments for 2023:
Enhanced Convenience
In-app payments offer enhanced convenience by allowing users to make payments within the app without the need to leave and use a separate payment platform. This saves time and effort for consumers and simplifies the payment process.
Some examples of contactless payment in in-app payment are popular mobile apps such as Uber, and Lyft and food delivery apps like DoorDash, which allow users to make payments in-app, making the payment process more streamlined and convenient.
Improved Security
In-app payments offer improved security by utilizing advanced encryption technology and biometric authentication features such as face recognition and fingerprints.
This ensures that the payment process is secure and protects users' financial information.
For example, Apple Pay, which utilizes biometric authentication, has become a popular payment method for in-app purchases.
Increased Adoption
In-app payments are becoming increasingly popular, with more businesses adopting this payment method.
This has led to increased competition and innovations in digital payment, resulting in improved user experience and more convenient payment options.
For instance, Starbucks' mobile app has been widely adopted, allowing users to order and pay for their drinks within the app, making it a convenient and popular payment method.
Personalization and Loyalty Programs
In-app payments allow for the integration of personalization and loyalty programs, enhancing the user experience and building brand loyalty.
This can include the ability to earn points, receive discounts, and access exclusive offers.
For example, the popular food delivery app, Grubhub, offers a loyalty program that rewards users with discounts on future orders.
Conclusion
Contactless payments have grabbed the attention of the fintech industry as well as businesses owing to their faster, more secure, and more convenient payment options for your customers!
The most prevalent contactless payment trends in 2023 are revolving around QR code payments, real-time payments (NFC), digital wallets, embedded finance, Buy Now Pay Later (BNPL), in-app payments, and data standardization through ISO 20022
DigiPay.Guru strives to provide fintech and businesses with advanced contactless payments in the form of QR Code payments, NFC, USSD, Virtual Cards, and many more.
