KEEP UP TO DATE WITH ALL THE IMPORTANT COVID-19 INFORMATIONCOVID-19 RESOURCE PORTAL
FANews
FANews
RELATED CATEGORIES
Category Banking
SUB CATEGORIES General | 

4 reasons why contactless payments are taking over the world

29 September 2021 Andre Hugo, Co-Founder and CEO of Spot Money
Andre Hugo, Co-Founder and CEO of Spot Money

Andre Hugo, Co-Founder and CEO of Spot Money

For the past 10 years, we’ve been hearing about how new-generation mobile apps, wallets, tap-to-pay, NFC solutions and even the humble QR code are going to spell the end of the magnetic stripe card as a means of payment. And here we are, in 2021, and we’re finally taking big steps towards a brave new world of contactless payments.

In fact, contactless payments are possibly the hottest trend in the financial services industry right now. Globally, Accenture predicts US$7 trillion in consumer spending will shift from cash to cards and digital payments by 2023. The Deloitte Africa Digital Commerce Survey found that 22 million South African consumers shopped online in 2020, growing to 32 million by 2024.

Mastercard has become the first major payment provider to start phasing out the magnetic stripe on its cards. By 2033, no Mastercard credit and debit cards will have magnetic stripes. In fact, physical cards are steadily being replaced by virtual cards, which are both safer and more secure.

As businesses scramble to adapt to a world of reduced cash and physical card transactions, we see four major advantages for contactless over old-school payment methods.

Germ-free, easy transacting
Contactless was initially all about ease of use. With Covid-19, the ‘no-touch’ aspect became the big winner. Using contactless methods to accept payments means there’s no need to handle cash or a card. Depending on the technology, there’s no need for customers to physically interact with a point-of-sale (POS) device, enter a PIN or sign a receipt.

It’s safe and secure
We’ve all heard horror stories about card-skimming. You think you’re swiping your card for that latte, and next thing you’re seeing unexpected transactions going off your account. With mobile wallets and virtual cards, you don’t even need to carry your bank card, and the merchant doesn’t see any card or banking details. With QR codes, which remain popular, each QR code is randomly generated, ensuring your personal information remains safe at all times.

They bring more people into the digital economy
As more digital payment solutions come to market, we’re seeing growing numbers of South Africans participating in the digital economy for the first time. And with solutions like QR codes, merchants don’t even need specialised hardware or POS equipment: the technology needed to enable QR-based payments is typically software-based, which makes it simple and quick to implement and allows merchants to offer a better checkout experience. This is going to be a huge advantage for the informal sector and micro-businesses.

It goes beyond the payment
Contactless payments don’t just create safe transactions: they add an entire new layer of brand benefits. The speed and ease of contactless payments allows brands to create better service for their customers with fewer abandoned transactions. Anything they can do to simplify the customer experience and reduce transaction time is a win. On average, it takes 6 to 7 seconds to process a cash transaction. This is reduced to 1 to 2 seconds for contactless. It doesn’t sound like a lot, but the difference it makes to customers is huge.

The research is overwhelming: South African consumers want the ability to make contactless, easy payments. And they want it now. Merchants that ignore the benefits of contactless payments do so at their own peril. And needless to say, Spot scans them all.

Quick Polls

QUESTION

The second draft amendments to Regulation 28 will allow retirement funds to allocate up to 45% of their assets to SA infrastructure, with a further 10% for rest of Africa; but the equity & offshore caps remain unchanged. What are your thoughts on the proposal?

ANSWER

Infrastructure? You mean cash returns with higher risk!?!
Infrastructure cap is way too high
Offshore limit still needs to be raised
Who cares… Reg 28 does not apply to discretionary savings
fanews magazine
FAnews November 2021 Get the latest issue of FAnews

This month's headlines

New proposals to amend PPRs have major impact
The untold truth about intermediary agreements
Rethinking claims
Tik-Tok: The clock is ticking on SA’s R45 billion unclaimed benefits bomb
Medical schemes’ average increases for 2022
Disability claims aggregation
Subscribe now