15 years of contactless cards: What we’ve learned and what’s next

Can we even remember a time when paying for something didn’t involve the tap of a card against a machine or entering a PIN number?

What started as an experiment with cards and contactless payments has now become the dominant world-wide payment method.

It’s been over 15 years since contactless cards we’re first introduced, so what has this done to payments and what do we think is coming next?

The emergence of contactless technology

When contactless payments were introduced in the UK in 2007, they weren’t an immediate hit with customers.

In 2021, contactless payments accounted for more than a quarter of all payments in the UK, according to UK Finance.

Most other developed countries are following a similar trend, with physical cash payments being replaced by convenient digital alternatives.

What we’ve learned about contactless payments so far

Contactless technology has transformed how customers pay for goods and services and have created an entire new industry of mobile payments and wearable payment technology.

For businesses and customers alike, contactless payments have introduced a huge range of benefits:

Faster payments and more customers

Thanks to the speed offered by contactless payments, customers can pay for purchases much faster than before.

This boost in speed has led many businesses to experience a boost in revenue – the faster you can get your customers in and out of the door, the more revenue you can expect to take.

Plus, having contactless as a payment option has been shown to increase impulse buying, raking in even more revenue for businesses.

Research has shown that customers who use contactless card payments are more likely to make additional ‘impulse’ purchases while shopping, according to GoCompare.

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Today, with businesses all over the world accepting contactless payments, and most customers willing to pay via contactless, offering contactless options consistently proves to be the smartest move.

Considering contactless wasn’t even an option just a few years ago, the rate at which it has taken hold is incredible.

But businesses that accept contactless payments also need to make sure they’re following all contactless card security rules…

Card security 

Businesses have a responsibility to keep the payment details of customers safe. 

This was the case before contactless arrived, but its arrival drew more attention to the need for impeccable security.

When a customer pays using a contactless card, at a contactless terminal, that card data is transferred from the terminal to a card processing network, to check for possible fraud, which validates the payment if everything checks out.

All of this happens in the space of just a few seconds.

But the signals received and sent by the card reader in question need to be encrypted to prevent potential hackers from stealing customer data. This is an essential requirement of PCI DSS compliance.

The Payment Card Industry Data Security Standard (PCI DSS) was created to ensure businesses that handle customer card data do so in a secure way, to prevent the theft or unintentional leaking of that data. 

Businesses that accept card payments can face severe legal penalties if they don’t follow these standards.

In the increasingly contactless world, 2-Factor Authentication (2FA) is another modern method banks use to protect their customers from contactless card fraud.

When someone uses a card, they could be asked to complete 2FA to prove who they are. This could involve the user receiving a code on their phone, or having to log into their online banking app to complete a transaction.

All of the above makes contactless payments sound a little risky. But contactless is still one of the safest payment options on the table.

Contactless is still one of the most secure ways to pay

Granted, there were some initial worries about contactless technology in the beginning. Some people highlighted ways fraudsters could “skim” the cards and steal a person’s card info.

But this turned out to be nothing more than unfounded scaremongering and contactless payments continued to grow.

Contactless cards remain one of the safest ways to make a payment today, thanks to the complexity of the technology involved in sending the contactless signal between your card and the point of sale (POS).

According to VISA:

“Data transmitted during transactions is encrypted and protected with a digital signature that is much harder to forge than a handwritten one… Each time your contactless device interacts with a payments terminal, it generates a one-time-only electronic signature and cryptogram, making it just as secure as a normal Chip transaction.”

So you should be more worried about thieves sneaking notes out of your pockets, rather than hackers stealing your card info when you make a purchase. One is far more likely than the other.

Customers value quick and easy transactions

People lead busy lives. The more time they’re able to save, the better.

Which is one of the reasons contactless payments have skyrocketed in popularity so quickly.

The quick and easy nature of the transaction is something many consumers value above all else when making purchases.

73% of consumers cited convenience as the top reason why they prefer contactless payments, with 54% citing the speed of money transfer, according to respondents to a recent survey by Amex.

Contactless payments fit neatly into the lives of billions. It looks like that isn’t going to change anytime soon.

Mobile payments, smartwatch payments and digital wallets offer versatility

The more ways businesses allow customers to pay for their purchases, the larger the audience they can hope to attract.

Since its introduction, contactless payments have evolved even further, with millions now choosing to pay for their purchases via contactless mobile payments.

This service allows users to access their cash via applications on their phones, like mobile banking apps and digital wallets. 

The phone then becomes the equivalent of a contactless card, allowing users to tap the phone at the card reader, as they would with a real card.

With $4.92 trillion worth of payments made via mobile in 2021 globally, according to data from MerchantSavvy, it’s clear mobile payments will become a power player, if they’re not already.

And with the estimated annual global growth of mobile payments at 23.8% until 2026 (according to the same report) more and more people will be adopting mobile payments as we move into the future.

Add to this the fact that smart devices like smart watches also offer mobile payments compatibility and contactless cards could soon become one of the lesser-used forms of contactless payment. A crazy thought.

What’s next for contactless payments?

Contactless dominates all other forms of payment

At the rate contactless continues to grow, it won’t be long before all other forms of payment are firmly classed as a secondary option.

The value of global contactless payments will hit $5,424 billion by 2030, rising from $1,168 billion in 2022, according to data from Contrive Datum Insights.

Mobile payments will be a major factor in these figures as well, with the global mobile payment market predicted to expand from $942 billion to $9924 billion, according to a report by The Brainy Insights.

As we head towards the end of the decade, expect to see more businesses shifting to a contactless-only way of working, with physical cash becoming more of a rarity in our stores.

At the more extreme end, 59% of British people believe we will be living in a completely cashless society by 2030, according to research from Thoughtworks.

What was once an unrealistic idea now seems more realistic than ever.

Payment security will be linked to your biometrics

A key issue in card fraud is criminals making payments under the guise of someone else. While it’s still an issue in 2023, it could become a thing of the past soon.

All contactless payments could soon be authenticated as a result of your biometrics, as opposed to using 2FA or confirmation codes.

Confirming payments using our fingerprints is already commonplace, with most new smartphones carrying some kind of fingerprint recognition technology. Most banks also accept these prints as confirmation of identity on mobile devices.

But other biometrics like facial recognition technology, which has made leaps and bounds in recent years, could soon be a common factor in authenticating payments.

In a world where millions of smartphones carry facial recognition technology, there’s no reason not to expect this to be widely used very soon.

Barclaycard has even suggested the implementation of vein scanning to make secure payments:

“Surprisingly, the blood vessels in your fingertips are actually more unique than even your fingerprints, and scanning them is just as quick – yet far more secure. In 2014, Barclays and Hitachi revealed that they had already produced a vein scanner and were offering it to corporate clients internationally.”

Or, if you want to get into science-fiction territory, implants could also soon be used to confirm payments.

Why bother with a contactless card when you could simply swipe your hand or wrist over a sensor to prove your identity?

Will cards disappear entirely?

Given just how quickly digital wallets and contactless options have taken hold, it’s not insane to assume that physical credit and debit cards could disappear entirely within the next 20 years.

According to Santander:

“Some consultants indicate that the demise of physical cards has an approaching date and with the speed at which the world is changing we are sure that date is just around the corner. In no time, having a physical card as a souvenir will be like the person who kept the pesetas to place them on the Statue of Liberty.”

If the mobile payment trends in countries like Sweden (where most contactless payments are made via mobile) continue to spread, it’s reasonable to assume both banks and consumers will begin opting for solely digital cards in the years to come.

So keep hold of your cards. One day, your grandkids will look at them like they’re a relic of a lost age.