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The Future of Contactless Payments: Trends and Predictions

Explore the latest trends in tap‑to‑pay, mobile wallets, NFC cards and touch‑free checkout. Discover what the future holds for contactless payments and fintech.

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Payoneer Team

Contactless payments aren’t new, but they continue to develop and, in many countries, people simply rely on their phone rather than carrying a wallet anymore. 

As more and more devices become enabled, it lessens the need for cards and cash – but how far will it go? Let’s take a look at where we are now and what lies in store for the future.

How does tap-to-pay work?

Contactless card payments work by using radio-frequency identification (RFID), near-field communication (NFC) or QR codes. Any enabled device emits a signal when it’s within range of an RFID reader, which allows the reader to download the data and process the transaction. NFC payments work in a similar way. Cards or smart devices can communicate with the payment reader by simply being held in close proximity to it. This means users no longer have to physically touch a keypad to put in their PIN. Contactless transactions are much faster than traditional payment methods, with the added bonus of being much more hygienic.

You’ll be familiar with the contactless symbol by now, and contactless payments can be made using:

  • credit and debit cards
  • mobile wallets, such as Apple Pay, Google Pay and Samsung Pay
  • app-based QR code payments via apps such as PayPal and Venmo
  • smart watches and other wearables

Its convenience is making it increasingly popular, and when Covid struck in 2020, the use of contactless payment methods exploded.

The benefits of going touch-free

Most of the benefits of going contactless are pretty self-explanatory but it’s good to list them all out here to really drive the point home. As many people with smartphones in big metropolises experience on a near-daily basis, the advantages of going touch-free for your payments include:  

  • speed
  • convenience
  • digital wallets reduce the need to carry a purse or wallet
  • better security and less likelihood of fraud thanks to biometric identification
  • mobile payments are hygienic
  • faster transaction time for payee
  • reduced cash handling for retailers
  • reduced transaction times lead to better retail profitability and shorter checkout queues

Current trends in touchless checkout transactions suggest that contactless payments are likely to play a major role in the future of payments. According to Grand View Research:

  • In 2021 North America led the tap-to-pay stampede, but Asia Pacific is set to become the fastest growing region.
  • In 2021 global contactless payments were worth more than USD 34 billion, and were predicted to reach USD 164 billion by 2030.

Contactless payments are becoming increasingly common, and businesses that adopt these systems may be better positioned to meet evolving customer expectations.

What about the future?

Here are the payment technology trends and fintech predictions that are giving us some indication of where contactless is heading:

  • Consumers prefer contactless to any other payment methods in retail situations, while paperless receipts align with green consumerism.
  • There are signs of an increased use of loyalty schemes through which consumers can earn points and access special promotions.
  • For small businesses and ecommerce retailers, the use of QR code payment systems mitigates the need for costly RFID or NFC devices, meaning this method of payment is likely to grow.
  • Contactless payments are typically processed quickly, which can be beneficial for businesses that rely on steady cash flow. Receiving payment from customers immediately gives SMEs greater financial control.
  • Consumers are abandoning traditional wallets for an ever-growing array of contactless-enabled devices including phones, watches and fitness trackers.
  • Biometric security measures, including facial recognition, fingerprints and voice recognition are being implemented, making modern smart devices more resistant to unauthorized access, which enhances the security of contactless payments..
  • Global growth in the payment market is now being driven by its uptake in emerging economies like Africa, Latin America and Asia, in line with smartphone adoption.
  • Touch-free transactions are providing a wealth of consumer data, which companies can analyze for strategic advantage. As the fees for contactless transactions are on a par with more traditional payment types, this contributes to their uptake by  businesses.
  • The enhanced levels of security and compliance for cardless payments make them popular with businesses of every size.

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Frequently asked questions (FAQs)

There are a number of emerging trends that are shaping the future of mobile payments:

– Biometric authentication methods are becoming more reliable and expanding into more devices, adding extra security and convenience.
– There are more wearable devices than ever before and contactless technology is starting to appear in clothing. It’s likely that as the “Internet of Things” develops, payment systems may be integrated into household appliances or cars.
– Blockchain has the ability to make QR code payments more secure, which will contribute to the expansion of this type of contactless.

As more devices incorporate NFC technology, these types of payments will become increasingly prevalent. NFC offers:

  • Seamless transactions
  • Enhanced security including tokenization and multi-factor authentication
  • A wide range of use cases, such as in public transport and vending machines

On the whole, mobile payments are more secure than some traditional methods of payment, but as with any payment system it can be a target for fraud. Concerns include:

  • Skimming – this is when thieves use specially-developed technology to capture payment data from unsuspecting victims. Many wallets and bags now guard against this with a protective layer that blocks the skimming equipment.
  • Hacking or attacks on mobile devices or payment networks could compromise payment security. However, cybersecurity protocols are continuously updated to mitigate against this.

“Touchless checkout” refers to the ability of cardholders and smart device owners to make contactless payments without needing to touch the payment terminal. It will impact transaction methods for both consumers and businesses over the next decade. Buyers already enjoy the quick convenience of cardless payments, but this is likely to extend to simply walking past a checkout terminal to pay for goods. As biometric technology is refined, shoppers might not even need a card or a device – simply their face or fingerprint for recognition.

For businesses, contactless is reducing checkout time and boosting turnover. It’s also reducing labor costs as more customers opt for self-checkouts and contactless payments. Finally, contactless provides a more detailed level of analytics, giving businesses greater insight into customer behavior and needs.

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