Contactless Payments are the Future & Here’s Why

In light of pandemic issues, consumers choose to avoid cash. Now, payment preferences lean toward phones, facial recognition and… cars.

Welcome to the New Age

The trend has become feasible back in 2020. At the dawn of the pandemic, digital money became a preferred payment method.

As Forbes reports, it took just half a year for the contactless trend to become a new reality.

Worrying about their health and well-being, clients prefer to avoid not just paper money and coins — they don’t fancy entering a PIN, touching a terminal screen or leaving the car either.

Here are the key highlights of the report:

• 60% of shoppers plan to switch to contactless payments.
• 54% are worried that cash usage can be dangerous.
• 32% vote for dismissing physical money per se.
• 30.5% would prefer to see nickels removed.

Naturally, more contactless solutions have been introduced lately. We’ll overview the prevailing solutions, employed by retailers, restaurateurs, and so forth.

1. Taps & Phones

It turns out, that tap-and-go concept has been especially on the rise lately. For instance, consumers in Asia Pacific — China, Japan, South Korea — have been switching to tap-&-go 2,5 times faster just in 2020.

This solution is possible thanks to Near Field Communication (NFC). In essence, all up-to-date smart gizmos are equipped with it: from smartwatches to phones.

Plus, this method is awfully convenient. No need to rumble through a wallet or purse, searching for the bank card or a bunch of fivers and tenners.

Just a quick tap, and your costumer will pay for groceries, new outfit or medications. The procedure takes merely 2-3 seconds, which contributes to the customer’s satisfaction.

2. Facial recognition

Customers can pay by letting the terminal (kiosk) scan their faces too.

Once the person in question is identified, the system will confirm the transaction and the money will be withdrawn from their card.

In US, PopID is in charge of creating the first national face recognition payment system. Restaurants from its hometown — like Daddy’s Chicken Shack — have already installed the kiosks. But a Pop app is required to make paying possible.

The method is also popular in China and India. Juniper Research reports that by 2025, 1,4 billion payments will be made with the help of facial recognition.

3. Voice

Another biometry-based method allows customers to pay with a vocal command. For that, a voice assistant is used to accept, recognize and verify your command.

Notably, voice payments are used as part of the in-vehicle payments. For instance, while on a drive-through, a consumer won’t need to use cash/card or let alone step out of the car.

Instead, paying for a yummy burger will be limited to a short phrase. And the market looks quite promising, to say the least.

Already in 2019, the so-called “motorist market” — e.g. purchases made by people from their vehicles — was estimated to be worth $230 billion. On a daily basis.

This includes everything a person on the road might want to need: a gas refill, tire repair, fast food or a cup of coffee. And as the prognosis by Ptolemus shows, in-car payments will reach the $500 billion mark by 2030.

To quote more facts, Juniper Research also mentions a collaboration between Honda and Visa. As it appears, voice assistant will become a standard addition to a car, like a cup holder. And this will take in-car payment acceleration even further.

What Else We Need to Know

Contactless payments are also expected to make another giant leap in the future. We’re talking about the Internet of Things.

In essence, Internet of Things (IoT) is a smart ecosystem, which allows multiple home appliances to interact with each other via a wireless communication channel.

They are becoming more popular: there are 38.82 billion IoT gadgets used as of now, according to Statista. Their number will grow up to 43 billion by 2025.

And these gadgets can power payments too. For instance, it’s already possible to order a list of groceries, using a smart fridge.

Just imagine what a leeway for shopping IoT will open. Consumers can order all types of goods — light bubs, power tools, clothes, medicine — using a hub of the IoT system. Which is additionally powered by a voice assistant.

Possible Threats

With all that, contactless payments raise a serious concern — live spoofing. Malicious actors already target and attack biometric systems on a regular basis.

First, a malicious actor can masquerade himself as a legitimate user, employing various techniques: masks, synthesized voice, printed photos, and even fake sculpted heads.

Unfortunately, voice and facial recognition are still vulnerable. And IoT protection against spoofing attacks faces such serious issue as inaudible commands.

So, it’s important to choose a payment system that is firmly protected against various threats.