Adoption of Contactless Payments and Mobile Wallets in the Retail Industry


Apr 6, 2023 ·


Adoption of Contactless Payments and Mobile Wallets in the Retail Industry

The Covid-19 pandemic has severely affected our lives. People have started wearing masks, using sanitizers, and maintaining social distancing from each other. Even the firms started maintaining social distance in such tough times. Social distancing has made things tough for businesses, which depend on cash transactions and other payment modes involving physical touch. The emergence of contactless payments and mobile wallets has been a boon for the retail industry.

Here, you will learn the most relevant things about the adoption of contactless payments and mobile wallets in the retail industry. Let's dive in.

How Contactless Payment Became Customer's Preference?

Retailers and customers worldwide have accepted contactless payments. A high percentage of customers have started using no-touch payments. Many people fear they will catch Covid19 disease by using cash for payments. Non-availability of contactless payments has become a deal breaker for many companies. They tend to visit a retail store offering a contactless payment option.

How Do Retailers Respond to Contactless Payments?

Retailers have positively reacted to consumer behavior shifts by accepting the contactless payment mechanism. Besides customers, employees in the retail store understand the risks that are related to cash and credit card management. Many retailers have rejected the full physical payment tools and have started to help customers in making payments only via P2P payment apps, NFC card, and many contactless options.

Types of Contactless Payments

Contactless payments are also known as "tap and go" and "tap-to-pay" as it requires a user to tap the payment card or devices, such as a smartphone, smartwatch, reader, and fitness tracker, which are equipped with contactless payment technology. Users don't need to swipe, log in or enter their PIN to make payments.

Here are the two types of contactless payments:

The first type includes digital wallets, like Google Pay, which secures debit and credit card details. It uses Near Field Communication (NFC) technology to enable a device for exchanging data with the payment terminal.

The second type is the integration of RFID technology into debit and credit cards. The RFID-activated cards come with a symbol that resembles a Wi-Fi logo. RFID and NFC help devices and readers to communicate and offer secure and touch-free payment transactions.

How Contactless Payment and Mobile Wallet Work in the Retail Industry

When a merchant and users do contactless payments, the user takes the card or smartphone near the payment terminal. The information acquired from a card chip or smart device gets transmitted to the bank. The customer gets notified with a beep, green light, or a checkmark when the moment system receives the tap. The transaction gets marked as successful once the approval is received. The merchant should have a payment NFC-embedded payment terminal for contactless payment.

Benefits of Contactless Payments

Contactless payments are much more than advanced alternatives to traditional payment options. They offer a good deal of benefits to both retailers and users, which are perfect for the future of payments.

Here are the key benefits of contactless payments for both retailers and customers:

For Retailers

Increased Operational Efficiency

Contactless payments are quicker and require fewer workforce. They take an average time of 12.5 seconds, which is less than approximately 33.7 seconds required for cash transactions and 26.7 seconds for card transactions. The shortened transaction time increases revenue and shortens queues.

Enhanced CX

Retailers offering contactless payment facilities facilitate a quick and smooth checkout experience and thus acquire customers' trust. Retail stores also strengthen their customer relationships by upgrading loyalty programs.

No Extra Cost

Retailers don't have to pay extra costs or processing fees to set up contactless payment systems. They have to pay the same amount of fees that apply for standard credit card transactions.

Fraud Protection

The state-of-the-art encryption technology embedded in contactless payments makes all transactions safe from hacking and other types of fraud.

Marketing Opportunities

Contactless payments and money wallets allow retailers to use multiple marketing opportunities, such as integrating location-centric marketing, customer loyalty programming, and personalized mobile couponing.

For Customers

Ease of Use

Contactless payments offer maximum convenience to users as they have to only wave the card or device in the reader's proximity. Plus, no-touch payments involve quicker transactions and shorter queues at the checkout point which enriches the customer’s shopping experience. Many of the users have recommended this technology to others.

Secure Transactions

Tap and Go payment technology is much more secure than other modes of payment. It uses chip technology that adds protection via advanced data technologies and encryption. Plus, contactless payments reduce the chance of users losing a card as it's never away from customers when they make a payment. Contactless payments eliminate fraud activities, like skimming, where employees steal the card's magnetic strip to acquire card data.


Contactless payments offer high flexibility to consumers as it’s available in various formats, such as mobile wallets, mini cards, key fobs, and stickers. It reduces or diminishes the requirement to always carry a physical wallet.

The Bottom Line

Retailers and customers have adopted contactless payments with the fear of catching Covid19 virus. Contactless payments will stay even after the pandemic leaves our world. Retailers and customers will keep choosing contactless payments over other payment modes for user-friendliness, safety, and convenience.

Contactless payments will turn out to be an integral part of our lives. They can transform the financial sector into a cashless society shortly.