The Road Towards Digital Payments During the Pandemic
The contactless payment market is estimated to surge during the global crises of the coronavirus disease owing to the need to maintain social distancing. Apart from this, the rise in technology, fast and easier payment methods, and network coverage have also impacted the contactless payment market during the pandemic.
‘Where did we come from and where are we going?’ is a famous line from Dan Brown’s book called ‘Origin’. This book signifies the importance of technology and its role in answering the question of ‘where are we going’. Digitization and technology will soon one day become the next element of planet earth. The roots of which have been planted in today’s time, especially in the Covid-19 pandemic. One important aspect of digitization is the economy and money transactions associated with it, paving way for the contactless payment market amidst the coronavirus pandemic.
What is Contactless Payment?
This is a secure method of payment that utilizes technologies like radio frequency identification (RFID) and near-field communication (NFC) for transactions. The name itself suggests that all forms of money exchanges will be carried out in a non-contact way. The only way to do that is by using digital methods of payments.
Some of the popular contactless payment methods are smartcards, credit/debit cards, Google pay, Apple Pay, and many more. Credit/debit cards are used with RFIDs, also called chip cards, that eliminates the necessity to swipe or enter a pin code. Contactless payment is not a new concept but its prominence has augmented due to the Covid-19 pandemic. For instance, in November 2018, RBI replaced all magnetic stripe-only cards to EMV chips and also started a second-factor authentication (PIN) for transactions up to INR 2,000/-.
How has Covid-19 Outbreak Impacted the Global Contactless Payment Market?
According to a report published by Research Dive, the global contactless payment market is anticipated to garner revenue of $20,340.3 million by 2026. The fear of getting infected has pushed people to opt for contactless payment, for instance, almost 79% of the MasterCard users preferred contactless payments during the pandemic period. This is a sign that the contactless payment market has enhanced during the Covid-19 crisis. The idea to turn India into a cashless economy post demonetization has been augmented in 2020.
The traditional methods of payment are fading away in today’s time; however, the geriatric population and the marginalized section of the society are still lagging in digital payment methods. In the current situation, it is essential to maintain distance and avoid infection from spreading. According to WHO, viruses can stay on cash for several days after exposure; thus contactless payment seems a better choice for now.
Apart from this, there was a 40% ‘year-to-year’ rise in contactless payment globally from January to March 2020. In fact, countries like Germany and China also experienced growth in digital payments during the pandemic. The major driving factors responsible for the contactless payment market growth are the usage of mobile phones and strong internet connectivity.
Online transactions can be risky due to cyber thefts, frauds, and scams but contactless payment has minimized these dangers by using magnetic strips at the back of the cards and all the information is automatically encrypted during transactions. Apart from this, biometrics usages such as iris recognition and transaction limits prevent fraud as well.
The contactless payment market is in demand due to advance technological changes such as artificial intelligence-based voice payments and wireless technology. These technologies directly connect debit/credit cards to fitness trackers, phones, and smartwatches for payments via Google pay or Apple pay.
Several countries are applying innovative strategies for boosting contactless payment, for example, AIB bank of Ireland suspended all charges on contactless payments for encouraging people to take up this mode of payment. Furthermore, retailers have reported a 69% rise in contactless payment since January 2020 due to an increase in online orders as per a study conducted by Forrester Research.
Social distancing norms are the only reason behind the growth of the contactless payment market that ascertains fast and simple transactions.
Future Scope of the Contactless Payment Market:
The contactless payment market will continue to grow in the post-pandemic world as well due to strategies, product launches, and collaborations applied by the market players. For instance, the partnership of SBI and Titan has devised contactless payment services via watches called Titan pay. This mode of payment rules out the option of card swiping or inserting pins and is available for all the people using MasterCard.
Another example of fruitful collaboration is that of Samsung and Curve that have launched Samsung pay in the market. This mode of transaction provides features like peer-to-peer payments, notifications on money spent, and switch payment sources retroactivity.
It’s pretty clear from the above deductions that the Covid-19 pandemic will leave a long-lasting impact on the contactless payment market, economy, and banking sectors.
Chaitali Avadhani is currently working in the content writing industry and has a Master’s degree in journalism and mass communications from Savitribai Phule Pune University. She is naturally attracted towards writing and is harboring experiences in the same field. Apart from this, she is a certified mountaineer and has passed out from Himalayan Mountaineering Institute, Darjeeling. Outside the office she is actively engaged in fitness activities such as running, cycling, and trekking.