With COVID-19 and the economic downturn, merchants and customers are looking for alternative payment options and thus developed a concept of cashless payment. The pandemic forced customers to shift towards online shopping and, in turn, choose the option of digital payment via virtual terminal and adopt real-time payment.
People are not willing to spend cash on anything to maintain hand hygiene and anything touched. Even though World Health Organization did not say anything against using cash, business is displaying signs that say “We accept contactless payment”. A recent survey conducted by MasterCard shows that 8 in 10 people use contactless payment. And 79% of respondents are using contactless payment as they are more hygienic than cash.
A Trend Towards Digital Payment
An increasing trend towards digital payments and reducing the use of cash is not new in the payment market. There are several alternatives available in the market to enable the use of digital payment. Payment processor companies, credit card companies, banks, financial technology companies, and retailers are involved in making digital payment successful. Contactless cards use the technology named NFC (near field communication) to connect card details to the PoS (Point of Sale) device with a swipe to receive payment. Moreover, as the fear of COVID-19 rises, customers and businesses are limiting themselves towards the use of cash and requesting for the high-value payment to be made via virtual terminal. Thus, following April 2, 2020, the retailers in Australia increased their contactless payment to $200 on POS devices.
There has been an increasing trend of using QR codes by small retailers, restaurants, bars & clubs, as well as religious venues. This is becoming a common practice worldwide due to the risk of spreading the virus through physical contact.
Evolution of Cashless Society
A Society is called cashless when cash is replaced with other digital payments. Instead of using paper money and coins in exchange for goods and services, we use credit cards, payment apps, PoS terminal, internet baking, and other different forms of electric payment. Here are some digital payment options that are becoming popular in a cashless society
Debit/ Credit cards are one of the most popular cash replacements in 2021. Mastercard revealed that in its recent survey, 82% of respondents view contactless payment as a clean and hygienic may to male payment.
Electronic cards are supported by virtual payment processors, like CloudBanking, to make a cashless society successful. They are useful to make payments for any goods and services without any physical contact. Popular in retail industries, field industries, and professional services, payment processor makes online payment effective with few software setups and clicks.
A mobile wallet like Android Pay and Apple Pay are trending in 2021 as they provide secure, cash-free payments. All you need an electronic device when you can scan and install your card detail. And your thumbprint makes secure payment anytime, anywhere.
Used as a digital currency, cryptocurrencies are used for buying goods online and the transfer of money. Bitcoin is the most popular used crypto and is famous in the U.S., but yet not practical for all businesses and customers.
As digital payments are moving from online business to restaurants and cafes, merchants and customers are becoming aware of the movement towards the Era of cashless payment. The term “cashless” has been a topic for heated debate as growing attention between a new era of cashless payments and the desire for increased business productivity. Merchants who are aware of this trend are responding positively by providing digital payment options to go cashless and increase their business efficiency, reduce customers waiting time, and create a competitive work environment by reducing the risk of data theft and online fraud.
An analysis done by Harvard Business Review shows that the use of cash for transactions less than $20 has dropped significantly (45%) in past years. Whereas in 2020, more than 60% of consumers use their card for a little purchase like $4.5 for a cappuccino.
Uprising Payment Industry
This trend shows that our economy is moving towards cashless payment. But there are few factors that merchants need to consider before moving towards digital payment. As the use of contactless payment increases, merchants are using payment processors and making a radical move towards a cashless society. The advantage of a digital system is it approaches real-time payment and makes payment visible anytime, anywhere. As cashless payments are becoming a hot trend, customers are carrying less cash and payment technologies are more dominant.
The payment industry is continuously focusing on making payments contactless and secure as the demand for touch-free payment increases. They focus not only on credit card payment but also provide virtual terminals so that merchants can accept any type of card from any device with an internet connection. Contactless payment such as Mobile pay (Apple pay and Android Pay) and payment platforms such as CloudBanking are shifting the economy closer to cashless payment.
While digital payments are efficient and quicker than cash payments, they even allow customers to pay from their mobile phones or any other device by scanning a QR code next to the POS screen or paper receipt. Moreover, a payment processor can help you make the business transaction seamless and data-rich. For example, a CloudBanking payment processor can help you track your business performance on a specific period- daily, weekly, monthly or quarterly. This system helps you keep track of your business transaction, customer interaction and make data-driven decisions
In a true sense, the card swipe machine and POS system can make payment cashless. But there is always a risk of data theft and cybercrime. A reliable cashless payment system includes features such as secure processing, Near field Communication for payment devices, digital receipts, and an integrated system that supports both online and in-store payment.
As digital payment technology becomes more secure, society continues to use a smart device to make a cashless payment. They prefer to pay by tapping their credit card or payment app near a POS terminal that could easily make the payment contactless. This way of payment is called “tap and pay”. New technology has supported biometric payment options where it allows the cardholder to touch their finger to the card’s sensor and bring it to hear a contactless POS machine. It provides customers with greater convenience and a feeling of secure payment.
Ashley Halcomb is a researcher and a freelance content writer for CloudBanking and Switchconnect. She is an ongoing learner and always curious to learn new things. She uses that curiosity, combined with her experience as a freelance business owner, to write about subjects valuable to merchants on the CloudBanking and Switchconnect blog.