Below is an excerpt from our latest white paper. We invite you to download the complete white paper. Please contact our team to learn more about implementing contactless payments at your credit union.
As has been often said in recent months, these are unprecedented times. And these times have had a direct impact not only on what consumers purchase but on how they are conducting transactions. Following the onset of the COVID-19 pandemic, avoiding viral spread in terms of health and wellness is now a primary focus globally. The use of digital tools has flourished, especially in terms of contactless payments, which include digital wallets, (such as Google Pay, Samsung Pay, and Apple Pay), along with contactless debit and credit cards.
Contactless payments are not new. In fact, the earliest contactless payment technology appeared in the 1990s, but adoption was slow and infrastructure updates lagged. Globally, over the past few years, contactless payments have been embraced more rapidly than in the U.S. For example, in 2018, only 3% of cards issued in the U.S. were contactless compared to roughly 64% in the U.K. and 96% in South Korea. In 2020, there are 175 million contactless cards in the U.S—more than anywhere else in the world.
What Are Contactless Payments?
The term “contactless payments” refers to secure debit, credit, or digital wallet payment methods that use Near Field Communication (NFC) and Radio Frequency Identification (RFID) that consumers can use to make touchless purchases at a point-of-sale terminal or contactless withdrawals at enabled ATMs. In order to complete a transaction, the consumer simply waves their card or mobile device over the contactless-enabled reader.
Tokenization is the reason that contactless payment security is enhanced. By creating a one-time code for each unique transaction, the consumer’s name, billing address, and card verification code aren’t transmitted by a method that has the potential to be duplicated, such as a traditional magnetic stripe. For example, with a magnetic stripe, fraudsters can use a device called a skimmer to capture personal information to create a copy of a magnetic stripe often used to make fraudulent purchases.
Contactless payments are propelling consumers forward in terms of payments advances and in providing touchless transactions. Once habits are changed, they stick. Offering and supporting these in-demand payment methods helps credit unions increase incremental revenue and retain primary financial institution status. Member education is key to continued product adoption.
Download the full white paper, which covers:
- What contactless payments are and how they work
- The benefits of contactless payments for your members and your credit union
- Consumer usage statistics
- How COVID-19 has had a direct impact on the adoption of contactless payments
- Ways to change member habits and continue promoting the adoption of contactless payments