Although we may not be ready for widespread chip insertions, largely due to the fact that they are more fiction than science right now, contactless payment adoption is imminent. And there are a whole host of concerns to prepare for with this, as it doesn’t only apply to brick and mortar retailers.
In this expose of the capability, we share consumer and market intelligence around the threats and opportunities retailers face with increasingly contactless payments, including:
- Potential for short-term increased sales, but also for long-term decrease in consumer connection and understanding, ultimately leading to less loyalty
- The technology learning curve both brands and consumers must overcome
- Fraudsters and identity theft concerns
And you’ll be interested to learn that:
- More than half of all Americans already use contactless payments
- Contactless payments are expected to triple by 2024
- 51% of Baby Boomers said they were satisfied with contactless payments.
- 70% of Generation Z consumers like these “no contact” options
- Millennials, at 75%, were the most satisfied group.
- And 60% percent of Generation X consumers like contactless as well.
Sounds like a win-win scenario, hmm? Almost . . .
Short-term Gains but Long-term Losses?
Contactless forms to pay have become increasingly more popular. By 2025 it is expected to grow to 358 billion.
The option to keep your hands away from potentially dirty and contaminated surfaces appeals greatly to consumers around the globe. But – there are a few things to keep in mind:
- Using ecommerce online is often more expensive when figuring in delivery fees, membership fees, and tips
- Older generations are not as tech savvy and will opt for more familiar ways to pay, so if that’s your target segment, be warned
- Some areas, such as grocery, are harder to shop online and to do business profitably
- Online shopping prevents some families from using much needed benefits such as SNAP (save a few)
- Even though a store offers contactless payment, a consumer still has to go into the store for pickup – and things need to change there as well, regardless
- And perhaps most important for brands to consider: Contactless payment doesn’t offer vital data on consumers that helps tailor personalized shopping experiences. And personalization, at scale, is key.
Contactless payment options could damage the personal touch that so many brands have strived to create within their consumer base. Brands may have lots of sales, but they’ll need to pay closer attention to their data, and the underlying insight that powers purchases. Or they’ll be flying blind and hoping for the best.
And at the end of the day, it has to be an option – consumers love the convenience and time saving qualities of it all. Being able to tell Alexa to order more dish soap as you’re doing the dishes is addictive:
Beyond that, ecommerce is the best no contact option presently, with curbside pick-up being next. And it’s becoming quite the sci-fiesque experience . . .
Technology Learning Curve
The ultimate in no contact practices, Amazon Go has thought of everything. Using AI computer vison (AICV), consumers purchases are logged and charged to their account as they take them off the shelf. They check in and out via their phone and need to do nothing beyond that. Cameras and weight sensors in the shelves help to detect product and people movement to help protect against theft.
Uber or Lyft are hip to this trend, and other companies in various stages of adopting AICV include:
- Sams Club
And other companies, big and small, are following suit.
Contactless Payments & Consumer Understanding
Companies adapting to Apple Pay, Amazon Go, or other contactless options are using consumer and market intelligence to help them personalize consumer shopping experience as that is what keeps customers coming back, even more so than exceptional customer service. And this is in itself is surprising, but that’s not all:
- Consumer behavior research has shown that people like being labeled, and they are more inclined to participate in their “groups’” message if they feel included. The inclusion part is key.
- 84% of customers say being treated like a person, not a number, is particularly important to winning their business.
- 70% of customers say understanding how they use products and services is essential.
- 59% of customers say customized engagement based on past purchases is especially important to capturing their business.
- Customers are 2.1x more likely to view personalized offers as important versus unimportant.
And vital to all of this is:
- 76% of customers state that it’s easier than ever to take their business elsewhere – brand hopping to find an experience that matches their expectations.
Customers expect a company to roll with the times, innovating along the way to meet the demands of the future. With customers harder to impress these days, fifty-six percent actively seek to buy from the most innovative companies.
- Using market research helped LEGO stay on it’s toes and continue to hit all demographics of consumers by making products geared towards girls. They saw a gap and a niche and filled it.
- And Nest used consumer analytics to improve their technology by asking owners about the height of the ceiling to better understand its connectivity.
Those who do not have consumer and market analytics tools in place now need to adapt quickly. As consumers are not waiting around. And they expect you to offer the latest, safest options.
Fraudsters & Identity Theft Concerns
As contactless payments are on their way to becoming the new norm, security has become the smoking gun of conversation. Luckily for consumers, it appears that tapping your phone is more secure than traditional forms of payment.
Contactless payment options have built-in safety:
- It is harder for thieves to steal your information compared with magnetic-stripe cards
- Mobile payments and contactless cards don’t transmit your name, card number, or three-digit security code
- The card sends the reader a one-time code, with information that doesn’t expose account details. Each time a consumer buys something, it sends a different code.
So, although it feels like a safety concern, it really isn’t.
eCommerce fraud is still a concern, of course. Here’s what we know about ecommerce security:
- Attacks spike on the 15th and 30th of each month, which is when consumer shopping hits its highest levels.
- In the US, shipping fraud increased by 37% and billing fraud – by 34%.
- 80% of merchants file disputes for illegitimate chargebacks. Only 18% manage to win most of their disputes.
- Signal Sciences reports that eCommerce retailers deal with about 206,000 web attacks per month.
- And Juniper Research expects online transaction fraud to more than double to $25 billion this year
Maybe contactless payments will help lower those numbers . . .
Many things are unsure right now, but your insight can – and must – be on point. You won’t be caught by surprise when you have next generation consumer and market intelligence informing your decisions. Reach out for a demo and start planning for tomorrow.