What is Contactless Payment? How and Why to Accept Touch-Free Transactions.

What is contactless payment? It’s a evolving payment method that gained unbelievable traction during the COVID-19 pandemic and is very quickly becoming a universal feature for merchants.

Contactless payment has been an option since 2008 when Visa, MasterCard and American Express began offering contactless cards, but very few merchants had invested in the RFID technology to accept contactless payment. Initially, the consensus was that there was nothing wrong with a customer inserting their card into a card reader and punching in their code to complete their purchase.

That all changed with the pandemic. Remember the first few weeks of spring 2020, when everyone was afraid to touch anything someone else had touched? And what surface gets touched more than a card reader keypad in a busy store?

Fortunately, the technology to make contactless payment ubiquitous already existed in every consumer’s pocket, be it on a card or on a phone (Google Wallet and Apple Pay were already well-established).

Merchants needed a reason to close the loop. The pandemic was it.

Today, many markets have hit a 90+% adoption rate, and that’s not the only proof that the market has moved:

• Total contactless payment transactions are expected to grow to more than $10 trillion by 2027, with a whopping 221% increase in contactless payments projected between 2022 and 2026.
  
  
• 80% of consumer credit cards will feature contactless payment technology by 2026.
  
  
• By 2027, 99% of smartphones will have the contactless payment capability.

Most importantly, 73% ​​of small business owners believe that new forms of digital payments are fundamental to their growth.

What is Contactless Payment Technology?

Contactless payment is what you get from radio-frequency identification (RFID), near-field communication (NFC) and quick response (QR) technology.

RFID and NFC are similar in that the technology can be used to send and receive radio waves, but while RFID will work at distances of 100+ metres or more, NFC maxes out at  20 cm of distance.

QR is different than both RFID and NFC, with the process requiring a third step: namely that the user take a picture of the QR code to launch the payment process. In one sense, it’s more effort for the customer, depending on how much effort you think it takes to scan a QR code. But QR codes give merchants like you so many more in-store options. For example, you could print out QR codes and stick them to the wall for your customers to pay without having to clog up the front of your store in a line.

Contactless Payment is What Drove the Mass Adoption of Digital Wallets.

If you had the choice between making a contactless payment with a physical card or your smartphone via digital wallet, you’d choose the digital wallet because it’s safer. A digital wallet doesn’t use your actual card number for the transaction. Instead, it generates a go-between number for added security.

For this reason — and because so many transit cards, gift cards and event tickets have digital wallet options — digital wallets are booming. The industry is expected to grow from $252B today to $396B in 2028. 

Apple Pay, Google Pay, PayPal and Venmo currently lead the way in North American digital wallets. Alipay and WeChat Pay are far and away the most used Chinese digital wallets. Africa’s MTN has over 70 million users. And 300,000 Europeans use PayPal on a daily basis.

Now, Contactless Payment Driving Wearables

Watches. Rings. Wristbands. Maybe shoes one day? Anything can become a payment method, and everything is becoming a payment method, because people want less to carry around.

Why Should You be Accepting Contactless Payment?

In short, to make it easy for more people to buy from you. More than half of Canadian consumers abandon a purchase if they can’t use their preferred payment methods, so it makes sense to avoid unnecessary drop offs.

And those “more people” goes beyond those from your neighbourhood, city and country.

The Canadian population grew by over 3% in 2023. It was the largest population increase in Canada since the 1950s, with StatCan reporting that 97.6% of that growth was fueled by immigration. The situation in the US is similar where immigration rates are the highest they’ve been in 20+ years.

Those are all potential new customers. Most of them prefer to use contactless pay because that’s what they know.

How to Accept Contactless Payments

Assuming you already have a payment processor for credit cards, a POS card reader and an online payment system, all you would need is the ability to accept multiple contactless options — and especially international options.

To do that, first figure out which contactless payment options you should invest in offering. Start by looking at where your customers come from and how they like to pay.

Then, find a payment processor like OTT Pay that can automatically convert your customer’s payment into American or Canadian dollars.

Finally, make it easy for customers to know what contactless payment methods you accept by displaying the associated logos.

When you decide what makes sense for your business, OTT Pay can provide you with POS terminal and e-Commerce plugin to accept all kinds of payment methods using an all-in-one World of Payments™ solution. Unlock new markets and grow your business with OTT Pay.