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How contactless payments in COVID-19 times is redefining trade and business


The Covid-19 pandemic has changed the way the world functioned. As social distancing becomes the new norm, there is a behavioural shift across all consumer categories. Now, when millions are working from home, communication and collaboration platforms have become indispensable and are seeing an all-time high. The escalating apprehensions about the spread of the Coronavirus through contact have ignited an acceptance of digital, globally. The payments landscape too is witnessing this disruptive change and it seems relatively more permanent here than it may be for other sectors. The consumer penchants have moved more voraciously towards fundamentally contactless payments.Covid-19 has brought voice payments, retina-based payments, digital payment mediums such as UPI, AePS, etc. to the forefront.

With evolving technology, the payments landscape is advancing rapidly. Where cash and cards once reigned supreme, it is replaced by digital payment methods which blend technology with advancing consumer needs. A contactless payment, as a concept, is primarily inspired and developed bearing in mind the customer’s interaction points. While Indian consumers had already started exploring digital payment options after demonetisation, the pandemic, however, fast-tracked the adoption rate as people are increasingly looking for safer, convenient and contact-free payment methods.

In addition, the increase of mobile phone usage, fast development in the internet infrastructure, and the remarkable rise of an app-based economy have motivated many innovators to transfer their attention to digital payments and more precisely now to contactless payments. With the drive from cash to less cash economy taking substantial dives, the fear of getting infected with the Coronavirus during the current pandemic is now making way for contactless payments and shifting focus for the next wave of revolution in fintech in India.

Globally, India is said to have the second-largest smartphone permeation. The online commerce and mobile PoS transactions are projected to grow to $134.5 billion with 657.77 million users by 2023. So, while the shift to contactless payments is still in progress, mobile payments will redefine the whole contactless payments experience. Simultaneously, with financial institutions and fintech companies placing bets on innovation and digital payment technologies, India’s contactless economy is slated to grow by leaps and bounds to become a cashless economy.

Today consumers have many transaction options to choose from –UPI, net banking, digital wallets, QR code scan, A2A payments, contactless payments cards. However, the current situation has put contactless payments at the epicentre of all-things payments. BNPL apps like have made people’s lives much simple in these trying times. As people are forced indoors and our dependence on technology surges, voice payments are becoming more and more useful and increasingly popular.

Voice payments offer banks and other financial institutions an opportunity to go contactless as well as capitalise on the idea of creating their own brand identity. It is prophesied that voice commerce backed by a super-intelligent AI will encompass all digital purchases like users can use voice payments to transact money using the peer-to-peer network or shop from nearby stores online. Though voice recognition technology is proving effective in numerous practical applications, its role in contactless payments in India is expected to been seen in a significant way going forward.

Not just voice payments, there are also discussions regarding introducing an iris-based payment for a safe and contactless transaction. This form of biometric authentication reduces the chances of fraud as retina scans are unique to each individual.

Following this league, a contactless smart card is capable of delivering the utmost levels of computer security to protect one’s identity, privacy and financial information. So do NFC-enabled smartphones. They allow phones to securely store the payment application and account information and to use the data as a contactless virtual payment card.

Contactless payment is not a new concept that got innovated due to the COVID-19 outbreak. RBI’s guidelines on debit card management – such as switch on/off, limits setting, domestic and international control, etc. – being made available in the self-service channels has also helped in building the trust on digital payments. Government-backed digital payment mediums like AePS (Aadhaar Enabled Payment System) and UPI (Unified Payment Interface) are ensuring contactless and cashless transactions and have seen a major uptick in the pandemic. This is because of the increased adoption during the lockdown – be it due to online grocery stores, online pharmacies, OTT players, recharges, online gaming, or bill payments.

The Government has also requested people to increase the use of digital payments in order to make payments contactless. The mainstream contributors to digital payments are still in a state of flux, hence it is too early to determine the long-term impact of COVID-19 on digital payments. As society moves beyond the survival mode, the impetus in digital adoption is likely to stay and become more permanent. Contactless payment as a phenomenon will evolve and stay and the payments ecosystem is gearing up with all its strength for the world after COVID-19.

By Phil Pomford, Managing Director, International Markets, Merchant Solutions, FIS



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