The COVID-19 pandemic has changed the way we buy and pay while forcing many businesses around the globe to find new ways to operate. The increased health concerns over handling cash, mixed with social distancing and new consumer shopping habits, has led to a surge in contactless payments as a way to minimize touchpoints.
The increase in affordable mobile devices and the expansion of internet connectivity has not only led to a mushrooming in fintech interplay, but it has also transformed the traditional banking methods. Today, consumers have multiple transaction options to choose from. Some of them include contactless payments (such as digital wallets, UPI, net banking, QR code scan, etc.), POS payments (such as credit and debit card swipes), and touchless payments (such as Near-field Communications as well as RFID-based card payments and tap-on-phone payments, etc.).
Digital payments have been gaining a foothold across the globe for the past couple of years. However, the adoption has virtually spiked over the last few months. As a preventive measure against the COVID-19 outbreak, people are increasingly moving towards touchless and contactless payments. This has created a new challenge for retailers, especially the ones predominantly dealing in cash. They have to make additional spends as equipment costs for their digital migration, further adding to their woes.
However, easy migration led by innovative platforms is also possible. Retailers also don’t have to purchase additional equipment as they can process such transactions via their smartphones.
Let’s have a look at some of these transactions and their various aspects.
Contactless and Touchless payments
Younger consumers with fast-paced lifestyles are driving the adoption of app-based payments across India, more so during the New Normal. Favoring quick and easy ways to pay, they are keen to bypass the traditional methods of payment and use their phone to scan a QR code or pay via a tap on phone methods instead. In turn, merchants benefit by handling less cash and also avoid inputting transaction-related data for better speed and accuracy.
A cashless society needs everyone from the payment processor, the financial institution, and government regulators to work together to protect customers against security incidents. With state-of-the-art technology at the processing end called tokenization, both merchants and customers have nothing to fear when it comes to bank details. The technology uses proprietary algorithms to generate a unique alphanumeric identifier (or token) that effectively hides sensitive data. Payments apps further feature a high level of security and incorporate several security standards such as PCI DSS alongside others. Various industry players are also contemplating chip-level security protocols to make digital payments more secure.
Payment Management Support
As merchants are increasingly called upon to support more payment methods, the ability to merge and manage omnichannel or multi-regional payment processing becomes crucial. The ideal partner provides a single point of contact for access to transaction records and chargeback status across all channels, along with customized reports, real-time fraud monitoring.
Payments are no longer just seen as a standalone service but also part of a user journey that extends from purchase intent to after-sales support. Beyond merely a cash register, payments are likely to be merged into business software and solutions, including marketing, operations, supply chain, or other support functions. Merchants will look for solutions that cover the full life cycle of pre-purchase, purchase, and post-purchase interactions.
It’s no secret that contactless technology is becoming more widespread, with governments advising retailers and consumers to minimize physical contact during payment processing. From offering faster checkouts and payment convenience to improving operational efficiency and providing marketing opportunities, Indian consumers can now experience a quicker way to pay at entertainment venues, dining, and supermarket retailers among others. Over 3.3 million merchants are now accepting cashless payments through various payment options in India. This growth can further push for increased use of cashless transactions in smaller retail stores shortly.
Even as businesses begin resuming operations after months of shutdowns and stay-at-home orders, consumers remain cautious about having direct contact with people during the payment process. Lack of payment modes (other than a physical monetary exchange) could stop customers from shopping in brick and mortar stores. Hence, more than digital, a contactless payment solution will not only increase peace of mind and aid in faster billings but will also be decisive for the future of the retail industry. Thus, enabling contactless payment creates a win-win situation, paving the way for the recovery of the retail sector.