The full extent of the impact from COVID-19 is years from being fully ascertained. However, it is evident that the ongoing pandemic has impacted every facet of our lives and consumer behaviour – from personal hygiene to the concept and application of work, shopping and everything in between.
But without a doubt, the area most impacted and which will have the longest-lasting effect is how consumers pay for the goods and services they purchase. Before the advent of COVID-19, payments were rapidly transitioning to digital options, which was largely a consequence of gradual acceptance of e-commerce.
While the shift toward less cash and more digital payments precedes the advent of COVID-19, there is no denying that the pandemic accelerated it – propelled by convenience but with an added layer of increased sense of hygiene. The natural question then is, what does the future of payments look like?
While the pandemic has promoted the limiting of contact with cash, traditional card-based alternatives inadvertently defeat the purpose if payment cards must still be handled by different parties before payment is made.
The current application of Point of Sale (POS) terminals and Automated Teller Machines (ATMs) requires an individual to provide the card for the operator to swipe or inserting one’s card into the machine to retrieve cash.
Even with the wider adoption of Mobile Money wallets, consumers often find themselves handling a decent amount of cash, especially when they have to make deposits. The most radical technological solutions appear to be simple, yet they are the ones consumers often do not realise they need; and with the prevailing conditions, consumers have come to realise that they have been itching for this solution.
Contactless payment solutions seek to eliminate contact. The result is a secure payment method using a debit or credit card, smartcard, or other payment device that applies Radio-Frequency Identification (RFID) or Near-Field Communication (NFC) technologies. This can also be done via NFC-enabled phones which are directly linked with mobile wallets, so that the customer can execute payment while eliminating contact entirely.
Typically referred to as ‘tap to pay’, these cards do not need to come in direct contact with the POS machine; a few inches proximity is all that’s required for the embedded chip and POS to communicate. Locally, there has been a rise of using Quick Response (QR) codes, which are scanned to effect payment without any contact.
As with the early adoption of any solution, particularly a technology-based solution, the biggest barrier to adoption is concern for security – and quite rightly so. With cyber-security breaches, fraud and identity-theft appearing to be on the ascendency, consumers are typically wary of persons being able to intercept their transactions remotely, or make repeat purchases using their cards.
Contactless payment systems are harder to breach than other solutions, especially now that smart chip cards have replaced the old magnetic stripes as the standard – ensuring that the cardholder’s data are encrypted and safe.
Remotely accessing the cards requires a POS, provided by a relevant bank, which can communicate with the card. A bank-provided POS is easy to trace, and banks have extra measures in place to block suspicious transactions automatically. Simply put, contactless payment solutions are safe.
Other concerns are more social and behavioural – including privacy from operators and the tendency to overspend when making payments digitally. The latter is solved by the fact that contactless transactions will be small-ticket ones.
While this applies to all forms of digital payment solutions, we know that the ever-present receipts available on digital payment platforms should ordinarily allow for better and more prudent financial planning.
Security Tip: All other prudent security measures, such as card safety, which apply to non-contactless cards should be applied to contactless cards as well.
Benefits to the ecosystem
The benefits of a contactless payment system are not for some stakeholders to the detriment of others. These benefits accrue to consumers, merchants – with particular emphasis on Micro, Small and Medium-scale Enterprises (MSMEs), regulators, and the state. These benefits include:
Reduced costs and business risks: Contactless payments eliminate several business risks, such as the possibility of cash theft or use of counterfeit currency. It also minimises transaction cost, as it eliminates logistics costs for security, transportation and verification.
Transaction speed: Making payments by cash (or other payment solutions) can be time-consuming for customers as well as the merchant or employee. Businesses have all to gain with contactless solutions, as they can leverage faster transactions and increased efficiency – usually within a few seconds. Faster transactions also lead to enhanced customer satisfaction, repeat purchase from those satisfied customers, increased revenue and fewer errors.
Increased security – With the use of biometric data, which is unique to customers and extremely difficult to breach. This gives both the consumer and merchant peace of mind that the transactions are safe and accurate. Furthermore, most issuing agents of contactless cards offer robust measures against theft – including blocking access.
Health and Safety: With the coronavirus still with us and causing much harm, contactless cards offer the best possible solution to touching surfaces beyond personal items, thereby curbing spread of the disease. Though vaccination drives are ongoing in earnest, we see mutations of the virus and the havoc this is leaving in its wake the world over. But beyond the coronavirus, many diseases are transmitted through touch. Contactless cards remain the safest and most convenient payment option.
As pioneers of the EMV card standard and leaders in the contactless payment space, Visa has been at the forefront of finding safer and more efficient ways to pay. According to the Visa ‘Back to Business Study’ for 2021 – which surveyed 250 small business owners at companies with 100 employees or fewer in Brazil, Canada, Germany, Hong Kong, Ireland, Russia, Singapore, UAE and U.S. – most consumers (more than 84%) are unwilling to revert to pre-pandemic norms of payment.
It further showed that 82% of small businesses – up from 67% in 2019 – have adopted new digital technologies, as more than half of consumers use contactless payments whenever possible. Closer home, we have seen the appetite for digital payments grow on the continent, as a recent GSMA report on Mobile Money showed that 46% of the world’s total number of mobile money wallets are in sub-Saharan Africa.
“With Ghana being a perennial early adopter of innovation and technology, we are rolling out the Visa contactless card in the country.
“In all the markets that we operate in, one thing we pride ourselves on is the roll-out of new and innovative technology, and we have reached a point now where we have introduced contactless into the market. It was a mandate we had at the beginning of 2020, when all of our banking clients needed to roll-out contactless cards and have their POS devices fitted to the standard,” says Country Manager, Adoma Peprah.
“We expect that this will stimulate trade in Ghana – particularly for small and medium businesses, as people make more purchases buoyed by our contactless cards.”
Visa’s vision of being the best way to pay and be paid – for everyone, everywhere – is core to our business; and contactless payments are consistent with the mission of achieving global financial inclusion.