Heading To The Future Of Contactless And Cashless Payment

In recent years, contactless and cashless payment solutions have become more popular than cash. These methods use something other than cash to make purchases, settle debts, and make payments for other items.

During the Covid-19 pandemic, more people turned to these alternatives. Here’s what you should know about them, why they’ve become so popular in the past year, and what they will look like in the future.

Is There A Difference Between Cashless And Contactless Payment Methods?

Some people use the terms cashless and contactless interchangeably when they refer to payment methods without cash. A major difference is that cashless methods require face-to-face contact between the seller and the payer.

However, some contactless methods do not require such interaction. Both methods eliminate the requirement to carry or receive cash once a transaction has been completed.

Familiar Traditional Cashless Methods

Cashless payments have been used by consumers for centuries. Checks are the oldest type of cashless payment. Even though checks aren’t as popular as they were in the past, they’re still valid in many places.

Vendors around the world offer money orders for specific amounts, which need to be paid in cash to the vendor who issues an order. That order is then mailed to the recipient, who may be able to deposit it into a bank account or cash it out.

The use of electronic funds transfers, such as certified checks and teller checks, is another cashless payment option. These payments are initiated through a third party, usually a bank, and are transferred to a designated beneficiary’s account.

More Recent Options For Cashless And Contactless Payments

Traditionally, customers have received items on credit from vendors and suppliers and were expected to pay back the balances within a set period of time. In recent years, credit cards have emerged as one of the most popular payment methods.

In the middle of the 20th century, emerging credit cards were originally called charge plates. The first cards were made from metal before plastic became popular.

Bank debit cards appeared in the 1960s, although another two decades would pass before this method became more widely used.

In the same way as a credit card, debit cards allow you to make purchases without cash, but they come with a personal identification number or PIN. While some vendors will accept debit cards like credit cards, others may require us to enter the PIN.

Radiofrequency identification (RFID) technology has enhanced the security found with both debit and credit cards. It is also used for other cashless and contactless payment methods, including payment apps with smartphones, smartwatches, and smart badges.

Other Factors Driving The Increase In Alternative Payment Methods

The internet has played a major role in the need for options that could be utilized for online commerce. Contactless and cashless payment methods are driven by convenience and the elimination of the need to carry cash.

As internet access became more widely available in the early ’90s, merchants understood the importance of making payments easy for online purchases.

Some online vendors allow customers to enter their checking account information or to use third-party services to withdraw money from their accounts. Payment processors allow customers to use debit and credit cards.

With the advent of apps, it is now possible to pay for goods with everything from virtual credit cards to physical debit cards, which further reduces the need to keep cash on hand.

The Motivation To Use Contactless And Cashless Methods During The Pandemic

Even though the cashless movement was already growing, a worldwide pandemic only accelerated the need for improved alternatives.

Several factors contributed to this, including:

1. Fear that the virus could be spread by handling cash.
2. As the pandemic continued, more businesses began to request that customers pay for their purchases using digital or cashless methods.

What’s In Store For The Future?

As younger, tech-savvy generations enter adulthood, the use of third-party services and apps such as PayPal and Venmo, as well as virtual credit cards like Apple Pay, is likely to become more common.

Will society become cashless?

Although some people may disagree, others see digital currency and fintech cryptocurrencies like Bitcoin as making cash obsolete. In the meantime, you’ll still find a few places that will refuse payment in hard cash.

Article References:

https://www.businessworld.in/amp/article/Digital-Dividend-The-New-World-Order-Of-Contactless-Payments-Cashless-Transactions-/07-07-2020-294985/

https://www.pwc.in/consulting/financial-services/fintech/dp/impact-of-the-covid-19-outbreak-on-digital-payments.html

https://www.infosys.com/industries/cards-and-payments/resources/Documents/goodbye-plastic.pdf

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