7 min read

Tap Into the Future With Contactless Payments

March 18, 2024

In recent years, contactless payments have surged in popularity across Canada, reflecting a significant transformation in consumer shopping habits. An astonishing 89% of Canadians have embraced this technology, tapping their credit, debit, or prepaid cards for in-store purchases every month throughout 2022. This embrace of faster, more convenient payment methods marks a pivotal shift in the retail experience, underscoring a broad move towards efficiency and ease in transactions.

Similarly, in the UK, 2023 was highlighted as a landmark year for contactless payments, becoming the most favoured payment method due to its speed and convenience, according to Barclays' annual contactless trends report. The adoption of 'touch and pay' is on the rise across all age groups, with a noteworthy uptick among the over-65s, showcasing the universal appeal of this payment method.

As we explore the expansive world of contactless payments, it's evident that this trend is not merely a phase but a key feature of the future of commerce.

Ready to learn more about contactless payments? Let’s get started!

What Is a Contactless Payment?

A contactless payment is an easy way to pay without using cash or swiping a card. Simply tap or hold your contactless card or smartphone close to a compatible card reader when you're checking out, and voila! Your transaction is complete. 

These payments go by several names, including touch-free, tap-and-go, or proximity payments. Buying something this way is often called a frictionless checkout, because it's so smooth and easy. You've also probably seen the symbol for contactless payments - it resembles vertical waves or a sideways WiFi icon. 

At DCGroup, we know how innovations like contactless payment technology can transform daily financial transactions. Our contactless card technology is crafted to enhance transaction efficiency while ensuring top-notch security and convenience. This commitment reflects our dedication to leading in financial technology, providing our clients with advanced tools for effortless, secure transactions.

_DC Group August Social For Approval (52)

The Rise of Contactless Payments

In Canada, the adoption of contactless payments has been meaningful, particularly post the COVID-19 pandemic, representing a significant shift in consumer behavior and payment technologies. With a highly developed financial infrastructure and a population willing to embrace technological advancements, Canada stands as a participant in global contactless payment adoption, though certainly with room to grow to catch up to other fast-adapting centers such as Europe, Asia and Africa. 

As noted above, this transformation has been accelerated by the COVID-19 pandemic, which underscored the critical need for maintaining strict hygiene practices and minimizing direct physical interactions in daily transactions. The pandemic not only heightened awareness about the health benefits of contactless payments but also cemented their value as a secure, efficient, and convenient method of payment.

And the numbers speak for themselves. In 2022, Canadians made a total of 7.5 billion contactless payment transactions, amounting to $379 billion in value. Year-over-year, the volume and value of contactless payments increased by 11 per cent and 18 per cent, respectively from 2017 to 2022. 

Additionally, the recently released "Global Mobile Payment Methods 2024" report reveals that this upward trend in contactless payment adoption isn't confined to Canada. Globally, the use of contactless cards is surging, with expected turnovers to surpass 9 trillion euros by 2027. This underscores a rapid shift worldwide towards more convenient and secure methods of payment. It means Canada is getting on board with a global trend of using touch-free payment options, showing a big shift toward handling money transactions digitally.

CONTACTLESS PAYMENT GROWTH 2017 – 2022 VOLUME AND VALUE (2)

Contactless Payment Technology

At the core of contactless payments is Near Field Communication (NFC) technology, which facilitates communication between compatible devices when they are within a very close proximity—typically about one inch. This technology is what allows a user to simply tap their card or mobile device on a contactless terminal. The embedded NFC chip in the device then communicates with the terminal, enabling a secure and efficient transfer of payment information.

The process behind each contactless payment involves a sophisticated network of infrastructure, including payment networks, issuers, acquirers, and merchants, all working together. Every transaction is protected through multiple layers of encryption and authentication, safeguarding the payment information's security and integrity.

As well, recent advancements in NFC technology have led to the development of innovative payment solutions, such as virtual wallets and wearable devices. These new technologies provide consumers with more ways to make contactless payments, utilizing smartphones, smartwatches, or other NFC-enabled devices. This evolution not only adds to the convenience and flexibility of contactless payments but also opens up a realm of possibilities for the future of transactions.

At DCGroup, our contactless card technology introduces an additional layer of innovation and security through our unique tokenization technology. This approach enhances the security of each transaction by replacing the traditional card's primary account number (PAN) with a distinct digital identifier or "token." This integration not only streamlines the user experience across both contactless and in-store payments but also plays a critical role in minimizing the risk of fraud. Enrolling in DCGroups' system is simple, allowing you to quickly benefit from secure transactions and the convenience of utilizing cutting-edge payment options like Apple Pay, Google Pay, and Samsung Pay.

Adopting Contactless Payments

The adoption of contactless payments extends across a wide range of sectors, including retail, food and beverage, transportation, entertainment venues, and more. In the retail sector, major retailers and chains have embraced contactless payments as a way to streamline checkout processes and enhance customer satisfaction.

Similarly, in the food and beverage industry, contactless payments have become increasingly popular, particularly in fast-food outlets and cafes where speed and convenience are paramount. By enabling customers to pay quickly and efficiently, contactless payments help businesses improve by reducing wait times, leading to higher customer satisfaction and loyalty.

In the transportation sector, contactless payments have revolutionized the way people pay for public transit services. From buses and trains to taxis and rideshares, contactless payment options provide commuters with a convenient and hassle-free way to pay for their fares, eliminating the need for cash or physical tickets.

In entertainment venues such as stadiums, theaters, and concert halls, contactless payments have become the norm, allowing patrons to purchase tickets, concessions, and merchandise with ease. By integrating contactless payment solutions into their operations, venues can streamline transactions and enhance the overall fan experience.

 

Advantages and Challenges 

As you can see, contactless payments offer significant advantages, benefiting both consumers and businesses alike. Here’s some of the main ways:

  • Convenience and Speed: Transactions are completed swiftly with a simple tap, eliminating the need for cash and reducing wait times.
  • Enhanced Security: Requiring the physical card to be present, particularly if tokenized within a mobile device that requires biometric data to access, can reduce the risk of fraud and bolster trust in the payment method for all parties.
  • Eliminates the Need to Carry Cash or Cards: Enhances the convenience by allowing payments through mobile devices or wearable technology.
  • Operational Efficiency: Minimizes manual processing and cash handling, leading to time and cost savings, and allowing for a higher volume of transactions.

However, alongside these benefits, there are certain challenges to be aware of:

  • Regulatory Compliance: Businesses must adhere to complex legal and industry standards, including data protection laws and PCI standards.
  • Interoperability Issues: Ensuring compatibility across various contactless payment systems can be complex.
  • Transaction Limits: Contactless payments often have maximum allowable transaction limits, which could restrict the size of purchases and impact sales for higher-priced items.

Despite these challenges, the shift towards contactless payments highlights a move toward a more efficient, secure, and customer-friendly transaction process, offering substantial opportunities for innovation and growth in the digital payment space.

_DC Group August Social For Approval (54)

Keeping Contactless Payments Secure

A big perk of contactless payments is their high level of security. When you use this method, your billing or payment information isn't handed directly to the merchant. Instead, everything is encrypted, and each transaction generates a unique, one-time code. This makes contactless payments a secure choice for both consumers and businesses, especially when compared to traditional card swiping, as magnetic stripes are considered outdated and can be more vulnerable to cloning and security breaches.

As mentioned earlier, DCGroup's contactless card technology enhances security through tokenization, replacing a card's primary account number with unique identifiers. This method, along with encryption and one-time transaction codes, ensures sensitive information remains protected. Our system streamlines transactions and minimizes fraud risk, providing secure and convenient payment options for users.

Finally, to further protect consumers in case of unauthorized transactions, currently contactless payments are subject to transaction limits. Typically in Canada, purchases using Visa, Mastercard, or Interac® Debit are capped at $250 CAD, although some retailers may impose stricter caps. Additionally, the zero-liability policies of most credit and debit cards provide protection against fraudulent charges, offering an extra layer of security for users.

Future Trends and Innovations

Looking ahead, the future of contactless payments is filled with promise and potential. As technology continues to evolve, we can expect to see many new payment solutions and innovations that further enhance the convenience, security, and flexibility of contactless payments.

One of the key trends shaping the future of contactless payments is the integration of payment technology with wearable devices and Internet of Things (IoT) devices. From smartwatches and fitness trackers to connected cars and smart home devices, the possibilities for contactless payments are virtually limitless, allowing consumers to make payments seamlessly and effortlessly in any context.

Advancements in biometric authentication technology are poised to revolutionize the way we authenticate contactless payments. From fingerprint and facial recognition to voice and iris scanning, biometric authentication offers a secure and convenient alternative to traditional PIN-based authentication methods, further enhancing the security and usability of contactless payments.

In addition to technological innovations, we can also expect to see continued growth and expansion in the adoption of contactless payments across various sectors and industries. As consumers become more accustomed to the convenience and efficiency of contactless payments, businesses will increasingly incorporate contactless payment solutions into their operations to meet the growing demand for fast, secure, and frictionless payment experiences.

Wrapping Up

Contactless payments have transformed the payment landscape, offering unparalleled speed, convenience, and security. At DCGroup, we're at the forefront of this shift, leveraging advanced card technology and tokenization to secure transactions and position ourselves as leaders in financial innovation. 

As often the first financial institution in Canada to introduce the latest in payment technology, we ensure our clients have the most advanced and secure solutions at their fingertips. Our commitment to innovation prepares our clients to exceed customer expectations with the most efficient and user-friendly payment options. 

Join us to access cutting-edge financial solutions and drive your business towards a future of secure, seamless transactions. Contact us to start revolutionizing your business today.

Sources: 
Business Payment Solutions Fintech virtual wallet cards contactlesscards contactlesspayments