Juniper Research recently published a whitepaper titled, “Cash is No Longer King: How Contactless Payments are Becoming the Norm.”
The paper from Juniper Research notes that bricks-and-mortar retailers are now “under pressure” to provide increasingly “frictionless” shopping experiences. Consumers have started expecting quick, secured, and frictionless payments “outside the retail sphere too; such as for travel,” the report reveals.
As mentioned in the paper, the line between physical and digital commerce is becoming “increasingly blurred” and channels are becoming “increasingly converged.”
The report added:
“With the strong emphasis on contactless payments as a result of the pandemic (and before the pandemic in markets where contactless payments were already well-established), the in-store purchasing experience has moved much closer to the online one.”
The paper also noted that the concept of touch-free payments and/or biometric authentication is “creeping increasingly closer to the online purchasing experience.”
The report from Juniper also mentioned that PSD2 (The Second Payment Services Directive) became effective in January 2018, and it means “radical changes” for the financial services sector.
As explained in the paper:
“From a high-level perspective, PSD2’s stated goals are to increase competition in the digital payments space, while simultaneously introducing new rules focused on more effective protection for the consumer. In the context of the latter goal, the updated EU PSD2 mandates SCA (Strong Customer Authentication) for all electronic payments.”
The paper further noted that on September 14, 2019, the SCA component of PSD2 came into force, with the “full enforcement deadline now set on the 31st December 2020.” This was extended to 14th September 2021 in the UK and then “shifted further to 14th March 2022,” the paper confirmed.
In December 2019, the PCI Security Standards Council released a new standard “to secure contactless payments on commercial off-the-shelf devices called PCI Contactless Payments on COTS (PCI CPoC),” the report noted while adding that the standard “expects vendors to certify solutions intended for contactless EMV and magnetic stripe data transactions only.”
The report also mentioned that global contactless card transaction values will “reach $2.5 trillion in 2021, from $1.7 trillion in 2020, with cards retaining the majority share of overall contactless transaction values at 79% in 2021.”
The report further revealed that the COVID-19 pandemic has “significantly” accelerated an existing contactless card usage trend, and these value increases “will be sustained beyond 2021 and into the future.”
The report identified that market growth has “already been catalyzed by increased contactless card use in previously underdeveloped markets such as the US and Germany, and that this shift will be permanent.”
In the United States, the Coronavirus crisis has now driven contactless card payments “to
the forefront in a market where they were burgeoning.”
Juniper Research anticipates that the US will “see transaction value growth of 136% between 2020 and 2021, with major US retailers rolling out contactless acceptance and consumers enjoying the added convenience offered by touch free card payments.”
The report concluded:
“Consequently, the global contactless card transaction values will reach $2.5 trillion in 2021, from $1.7 trillion in 2020, with cards retaining the majority share of overall contactless transaction values at 79% in 2021. The pandemic has significantly accelerated an existing contactless card usage trend, and these value increases will be sustained beyond 2021 and into the future.”