Contactless transactions are one of the payment technologies that’s increasingly becoming popular. Before the COVID-19 pandemic, contactless payment services were mainly used by early adopters; however, today, it’s one of the most preferred ways to pay. According to a poll by Mastercard, 51% of Americans now use a form of contactless payment, such as mobile wallets and tap-to-go credit cards.
This technology became a hit during the pandemic as more customers avoided contact with POS terminals and cash. Small banks and credit unions now offer customers contactless debit and credit cards to ease payments. These financial institutions use Near Field Communication (NFC) to process secure payments to stay competitive.
This blog post will examine the growing trend of contactless transactions and the significance of NFC mobile payments for small banks and credit unions.
The Rise of Contactless Transactions
Contactless payment technology has changed how people transact. As digital payments become the norm, mobile wallets such as Apple Pay, Samsung Pay, and Google Pay, as well as contactless debit and credit cards, are being adopted globally. Banks are adopting NFC mobile payments to meet customer expectations.
According to Michael Schrezenmaier, Europe CEO at SumUp, the shift to online banking has recently accelerated the move toward a cashless society. He says, “There’s no doubt that some of the biggest innovations in regards to merchant products and services being utilized in the industry have been around contactless payment solutions.”
Customers are demanding these forms of payment because they are convenient and fast. There’s no need to enter the PIN details or swipe a card; merchants can process payments faster, reducing checkout time. They are also highly secure, which reduces the chances of fraud.
Understanding NFC Mobile Payments
Near Field Communication (NFC) is the wireless technology that allows two devices, like your phone and payment terminal, to communicate when held close. Therefore, you can make contactless transactions when holding an NFC-enabled smartphone or contactless card near a payment device.
NFC works like radio-frequency identification (RFID) technology; however, the data sharing is limited to about 4 inches. These NFC mobile payments have an advantage over traditional payment methods because they offer immediate processing and are highly secure.
These transactions are secure because mobile payment works by sending encrypted transmissions. An NFC chip is embedded in the device. These devices work with mobile wallet applications like Apple Pay and Google Pay linked to the user’s bank account or credit card.
Advantages of NFC Mobile Payments for Small Banks and Credit Unions
Here are the advantages of adopting NFC mobile payments for your small bank or credit union:
Improved Customer Experience
Contactless transactions remove the need for customers to confirm a PIN or tap buttons on the POS terminal. When these steps are removed, the transaction time is reduced, leading to shorter queues and improved customer experience.
Potential for Increased Customer Loyalty and Engagement
When the queues are shorter, customers are more likely to come back again. Therefore, you must showcase your commitment to offer the best service to boost customer loyalty.
Integration and Implementation
Anthony Lacovone, Augme, a leading voice in mobile integration for large traditional media organizations, shares, “Near Field Communication (NFC) will open the floodgates for profound changes in how we use our mobile devices. It will soon dominate how consumers secure coupons and deliver payments; our phones will become our wallets.”
Therefore, for your banking system to keep up with this growth, you need to find ways to integrate this technology. Here are the key steps to take:
Check for Compatibility
Before integrating the NFC technology into your banking system, ensure it’s compatible with your system. Confirm if there’s API implementation support to make the implementation process much more manageable.
Go for Scalability
If your bank plans to expand and take on more clients, you need NFC mobile payment solutions to help you scale.
Work With a Reliable Technology Partner
To successfully implement contactless payments, you must partner with a reliable partner like iCheckGateway.com. With this, you can access powerful technologies that allow you to accept customer payments. Additionally, you can use tools like iCG's Hosted Payment Portals to help you leverage online payments.
Benefits of NFC Mobile Payments For Customers
As a customer, here are the benefits of using NFC mobile payments:
Thanks to contactless payments, customers don’t have to spend a lot of time completing payments. Payments can be processed through a virtual terminal or application, even if you don’t have a physical card.
Contactless transactions are highly secure because they use encryption to process payments. Customers don’t have to handle cash or touch the screen to make payments. Linda Kirkpatrick, president of U.S. issuers at Mastercard, shared, “If you’re at a grocery store or a drug store where a consumer should avoid touching a terminal or coming into contact with the cashier, what contactless products provide an avenue to shop safely.” This was quite important during the height of the pandemic.
NFC mobile payments are versatile; therefore, customers can use different payment methods. Integrating with loyalty programs and using several digital wallets to make payments is possible.
Successful Adoption of NFC Mobile Payments
Wings Financial Credit Union has adopted NFC mobile payments. Customers can get a contactless debit card after opening a checking account with the financial institution. Thanks to this adoption, customers can tap to pay using their cards when they shop. All the payments are protected; therefore, customers won’t lose their data.
Future Outlook and Industry Trends
Globally, the contactless payment market is expected to grow at a CAGR of 19.1% from 2022 to 2030. This growth is due to the high adoption of digital payments to meet customer demands.
According to Greg Goldfarb, VP of Commerce Products at GoDaddy, “Although many social distancing restrictions have eased, in the last two years, consumers developed new habits that have become expectations for how they shop. Consumers are becoming much more comfortable relying on a digital wallet and reducing the usage of their physical credit cards.”
This means that NFC mobile payments will become the norm as we shift toward digital payments. Consumers are increasingly relying on their mobile devices for convenience. Therefore, as a small bank or credit union, you need to stay ahead by embracing these innovations.
NFC mobile payments are convenient, highly secure, and scalable. Therefore, as a small bank or credit union, you must invest in contactless payment technologies to stay relevant in the modern banking landscape. This will come in handy if you want to experience long-term growth and improve your customer experience.
iCG enables financial institutions to accept different forms of payment. Contact us if you want to incorporate our technologies into your bank or credit union.
MORE TAGS:Payment Processing, Mobile Payment Techology, Virtual Terminal, Faster Payments, Banks and Financial Institutions, Payment Security