Contactless payments: spike during COVID-19 and future is really something. Covid-19 has changed how the world thinks, acts, and reacts in more than one way. The dreaded disease that has been responsible for putting the entire world’s health and economy at tenterhooks is yet to completely die down, forcing people and governments across the world to adapt. Apart from fitness, the most significant impact has been on the economy, changing how people live, communicate and transact.
In this article, we will look at why Covid-19 has resulted in a spike in contactless and the way forward!
Increased Cash Adverse Consumer Behavior
Since it was discovered that close contact and touching infected surfaces and things could put one at a higher risk of contracting the disease, people became more cash averse, and contactless payments became the norm. Moreover, from retail giants to small business owners, everyone started implementing ways in which contactless payments could be promoted and the lives of the average consumer could be simplified, and technology has played a major role in helping both sellers and buyers.
Upcoming technologies like QR codes and digital wallets were suddenly all the rage worldwide, as they allowed a quick and convenient method to make contactless payments seamlessly across banking and card networks. Suddenly there was no need for a credit or debit card to process payments, helping small business owners compete with big retailers as the pos device wasn’t a prerequisite to facilitate online payments anymore.
This, coupled with a sudden rise in the popularity of delivery apps, further strengthened the use of contactless payments as cash on delivery was paused by most of these apps, and customers were encouraged to make either prepaid payments or digital payments on delivery.
UPI Emerged as One of the Biggest and Most Popular Players
UPI, or the United Payments Interface, emerged as one of the single most prominent players in the digital payment domain. The system that was designed to operate seamlessly across banks didn’t require any topping up (as in the case of digital wallets) or sharing any financial information while making payments.
The customer could either scan a QR code or enter the UPI ID of the other party to make a direct bank transfer making the entire process buttery smooth. Such was the platform’s popularity that more than 2.8 billion digital payment transactions worth more than ₹5 trillion rupees were recorded in June 2021 when India was going through its biggest Covid-19 crisis and lockdowns had been implemented across the country by various state governments.
What the Future Holds for Contactless Payments?
As witnessed during the worst phases of the pandemic, major eCommerce giants, blockchain platforms, apps, mobile developers, and banks embraced this change in the payment behavior of the Indian consumer, whereas cash was the preferred mode of making payments before the outbreak; contactless payments were preferred post the outbreak. This had a far-ranging ripple effect across eCommerce, hyperlocal, logistics, and transportation categories.
The rise of various mobile technologies has switched user behavior towards making contactless payments by making it more secure and convenient for end-users. This means that the spike witnessed during the peak of the health crisis will continue in the future. As the proliferation of smartphones, and other connected devices increases, so will the number of users preferring to make contactless payments as opposed to paying in cash.
India is one of the few developing countries that is making a push for a completely digital economy, and the efforts seem to have paid off. Whereas countries in the developed part of the world like the US and Europe mostly use card payments, the Indian population prefers making mobile payments. This is because none of the western countries has been able to develop a seamless payments system like UPI QR code that makes contactless payments a better alternative to using cash or cards.
With more innovations such as users now being able to make contactless payments without owning a smartphone or an internet connection using UPI and upcoming tools like e-RUPI, even primary feature phone users will be able to embrace this change!