The road to the cashless society
By Howard Berg for Finextra
It’s over forty years since Britain went through its last true payment revolution with the decimalisation of the country’s currency system. What was part of our day-to-day lives was gone over night and while we will not see the same dramatic shift, we are on the brink of the UK’s, and indeed, the world’s next payment revolution – contactless.
The rise of contactless payments has been much documented; questions still remain about why it hasn’t taken full hold yet. According to a recent report from WorldPay, one third of consumers believe that cash will become obsolete by 2020. To many, this may seem like an ambitious target to render something obsolete that has been around for hundreds of years, but the tipping point is nearing and it won’t be far down the road.
The benefits of contactless
There are a multitude of explanations as to why contactless is set to become the main method by which we pay for things in the UK. The primary reasons though, are speed and convenience. Contactless allows consumers the freedom to spend where they want and how they want with a variety of form factors, from mobile to contactless cards and wearables. Instead of having to go in search for a cash machines, consumers have the choice to pay how they want in the situation that they are in. Contactless also paves the way towards multi-application, as the same physical device, be it mobile or wearable, can also be used for transit and access control. This can ensure physical devices extend just beyond payments to include things like coupons and membership cards.
For businesses, speed and convenience are also key factors. By increasing the efficiency of the transactions, this can help speed up the number of sales that are made, which ultimately will benefit their bottom line. As more and more businesses choose to adopt contactless solutions, this convenience will only grow.
What is holding contactless back?
There are some immediate limitations holding contactless back, such as the maximum spend on contactless cards currently in place. While this is there as a security protocol, it is something that is disrupting convenience for consumers.
In order for any technology to be fully adopted long term though, it needs to be truly trusted by the customer or it simply won’t be effective. The biggest issues that stop consumers, and in many cases businesses, from adopting are security fears. Businesses have a job on their hands in convincing consumers that the contactless payment solutions they are rolling out are more secure than the cash in their pocket or as secure as traditional EMV payment methods.
User education can help raise awareness about the security infrastructure they already have in place and stop the spreading of false myths about the perceived security vulnerabilities of contactless payment. Contactless is simply a fast and secure EMV payment and EMV gives businesses the reassurance that they have enough in place to guarantee contactless transactions and stop aspects like ‘digital pickpocketing’. According to the UK Cards Association, fraud losses in the UK on contactless cards in the UK remain consistently low, representing just 0.02% of call card fraud from January to June last year. However, despite this security and fraud at extremely low levels, businesses still need to shatter the myth that contactless is not secure.
Convenience is key
It isn’t just security that is holding consumers back though, but also an issue of convenience. Today’s consumer demands convenience, speed and choice when using anything. This is no truer then when it comes to payments and something businesses should take note of. It’s no use simply offering one way to pay anymore. With the increasing advancements in technology that have introduced the era of mobility, consumers expect to be able to do things how they want, when they want and wherever they want.
In order to fulfil this desire and ensure contactless reaches its true potential, businesses need to focus on developing the multiple form factors, mentioned earlier. While contactless cards are clearly the front runner as far as businesses are concerned, there is no dominating factor, with mobile payments, wearable device payments and store loyalty cards proving popular – there are even contactless fobs and stickers. In order to offer that truly convenient experience, businesses must focus on offering a range of options that will suit the consumer no matter what situation they are in.
The year 2020 may seem like a long way away for some, but for businesses it is just around the corner. In order to meet the expectations that cash will become obsolete by then, businesses have a big job on their hands to address the concerns and demands of consumers. However, if they can do this then we can expect change to happen almost instantly.
First appeared at Fineextra