While contactless became a trend across all industries from travel to education, not all businesses have already adopted it. Or not to the full extent, at least. And do they even need it?
Fintech expert Daumantas Barauskas, COO of Genome, an electronic money institution licensed by the National Bank of Lithuania, shares his point of view in this article.
Barauskas is a well-known expert in the Lithuanian fintech community with more than 20 years of expertise in financial services for companies in the industry, such as Paysera.
We’ll also find out what e-commerce experts think of contactless.
The contactless economy can be defined as a form of economy, ‘independent of face-to-face contact between customers and salespeople’. It has been rising over the last decade, however, the Covid-19 pandemic gave it a boost since the customers are avoiding personal contacts and purchasing more online. It also directly affects customer satisfaction, since several studies show that consumers are less willing to pay in cash and more eager to pay via card or a mobile app. But we’ll talk about it in more detail a little bit later.
Let’s start with the question: why is it so important for e-commerce business owners?
What is the contactless economy and how it works
According to Deloitte‘s 2020 report Contactless Economy: Are You Prepared? in the US, at-home consumption alone has the potential to be a $3trillion market by 2025. And the top three sectors with the most growth will be financial services, health, and consumer products. For example, 59 per cent of surveyed learned via an online course, a Dentsu report says. Also, Google Pay holds the majority of payment transactions, with 60 per cent of them processed through virtual wallets.
But what’s so special about that? Online payments, virtual education, and digital wallets have been popular and loved for at least the last decade and there’s nothing groundbreaking about it. Yet only now we’re talking about its rapid development. The main reason – yes, you guessed it, – is the pandemic. But no matter how hard it hit our economy and has been driving digital transformation, it’s not only about it.
Drivers of the contactless economy in e-commerce
The abovementioned Deloitte report defines five key drivers of the contactless economy in e-commerce. These are high awareness of health and safety, the development of 5G and cloud-driven technologies, the rise of human experience platforms, and the fact that digital consumers can maintain a greater sense of normalcy. Let’s begin with the last one.
Ability to maintain a sense of normalcy
All the lockdowns that went one after another got on the people’s nerves and disrupted the way we live for at least several years in the future. ‘Remote’ and ‘digital’ ways of doing things became the new normal and allowed people to keep many things they were used to offline: visit events, educate themselves, communicate with loved ones, even travel, and, of course, shop. Thus, this paved the path to almost everything contactless, involving more digital purchases.
The use of cash significantly dropped, as people minimised contact to prevent exposure to the virus. This was reported in Mastercard Impact Study 2020: Malaysia Leads E-Wallet Usage Sea by Soyaincau.com, with 67 per cent in Singapore, 64 per cent in Malaysia and the Philippines, and 59 per cent in Thailand.
Cloud- and 5G technologies development
Unlike legacy systems, cloud architecture enables better cooperation across the teams and departments, paving the path for more effective technologies. The same with 5G, as it helps to improve customer experience and according to a recent Deloitte survey, 76 per cent of business owners see this technology development as a crucial one in the next three years.
Daniel Foley, marketing specialist at 88Vape agrees with that: “We have been implementing these two aspects into our business to promote our digitisation further. The use of 5G services will pave the way for our company to have faster online services. Cloud services will make it easier for our teams to collaborate with each other.”
The popularity of human experience platforms
The platforms that simulate the human experience in ways such as voice search, visual systems, and chatbots make online shopping more realistic and pleasant. It can also be done through 3D models of the goods or even augmented reality apps that allow for trying them in a context, closer to real life.
“Visual commerce is gradually but steadily integrating itself into e-commerce, as evidenced by the expansion of the deep-learning technology that powers it,” explains Gerrid Smith, CEO & founder of Property Tax Loan Pros. “In a nutshell, visual commerce is the evolution of static visuals. It elevates marketing to a new level by combining additional sorts of graphics such as consumer-generated media, interactive content, engaging films, and augmented reality.”
Now, let’s discuss how e-commerce businesses can implement some of the contactless elements.
The contactless economy for e-commerce: use cases & challenges
The e-commerce businesses have been adopting contactless economy elements while as soon as they appeared on stage. Here are some of the most popular, yet the list is broader:
● digital payments and invoicing
● online ordering and shipping
● virtual gift cards and vouchers
● QR codes
A significant place here belongs to the payments via digital wallets, the tools that appeared recently. These are online payment tools that securely store payment details from a user’s debit or credit cards and allow for using them fast and easily while paying for purchases.
From the merchants’ side, digital wallets serve as an alternative for payment processing systems. Gavin Johnson, managing director at Evking says that according to a National Retail Federation blog, contactless payments have climbed by 20 per cent since the pandemic began, with Apple Pay, Samsung Pay and Google Pay experiencing the most active growth. Digital wallets are also used to store vouchers and tickets, making their access easier.
The perks of digital wallet applications from the business-owner side are also quite obvious. They can have cards, physical or virtual, with several accounts linked. Virtual cards aren’t different from physical ones, but they are more secure and don’t need to be shipped to a customer. They are ready to be used as soon as your wallet or bank approves the request.
Besides, with all the important data such as CVV2 code, a card number, and expiry date are stored in an app or a web portal, they are hard to be stolen. Yet, virtual cards work just the same as physical – they can be used for all payment operations, even with digital wallets. These are especially good for those who need a card urgently and would like to save costs on card issuing (and be safe in terms of Covid, since there’s no need for physical contact.) For this reason, Genome also introduced virtual cards recently so that the clients can link their accounts in EUR, GBP and USD.
But what are the challenges in implementing these elements and what challenges can you expect? Here are some thoughts from the industry representatives.
“We have had a contactless payment method since we have started this SaaS business. Because of the pandemic, the number of users for our service has increased tremendously, but the contactless payment method doesn’t work in most of the second world countries and almost all of the third world countries. We have received many complaints about the payment method but still, there is a need for a more flexible contactless payment method which connects around the globe,” says Stephen Curry, CEO at CocoSign.
Patrick Crane, the founder and CEO of Love Sew, shares his concerns: “Currently, we are looking into implementing Apple Pay, Google Pay, PayPal and Amazon Pay as contactless payment options for our customers. The main challenges with contactless payment options are the fees charged by the vendors, as well as the numerous steps one has to undertake to be accepted in these payment programs.”
Besides problems with payment processing itself, the shift to a more contactless experience will also involve changing the way your customers interact with your platform.
Jason Sherman, founder of TapRm notes that contactless economy would require continuous optimisation of e-commerce websites with streaming analysis of user interaction becoming the driving force behind improving the user experience.
Edward Mellett, the founder at WikiJob.co.uk, also emphasises the importance of adapting an interface: “With an increasing number of websites designed for mobile use, ensure that not only your website but also your online store, is mobile-friendly. By doing so, you simplify and increase the accessibility of e-commerce to a broader audience.”
Considering all these challenges, is it even worth adopting contactless technologies? Here’s what the customers think.
Customer satisfaction & contactless economy
A recent survey by Poland’s Santander Consumer Bank shows that the availability of paying by card increases customer spending by 37 per cent. Besides, 86 per cent of consumers claim they are willing to pay more for a better experience. Also, they want their service to be fast and convenient.
Daniel Foley comments on this: “Businesses that offer virtual payments should take note of customer needs and implement the required payment methods into their transactional system. Even now, two-thirds of the business market has not invested in a contactless payment system which is alarming as Covid-19 has only increased for online payments.”
Patrick Crane also thinks that contactless payments make people happy: “Customer satisfaction has in many ways improved with the roll-out of different contactless payment options. These alternative modes of pay are convenient, highly secure, and time-saving. All these benefits influence the customer perception of the service offered by the merchant, resulting in greater satisfaction.”
This also means that a contactless economy equals personalisation.
Amy Block, director of marketing and communications for Navitar thinks that the e-commerce industry is becoming increasingly consumer-focus. “The more online shopping is tailored to the consumer, the more likely the consumer is to navigate to a purchase page and complete the sales funnel. As we enter the 2022 year, seek opportunities to customise your e-commerce process,” Block says.
To sum up
With all this mentioned, there’s no doubt that the contactless economy will stay and evolve. Safe, fast, and personalised, it will shape the way businesses function. For sure, we’ll see more contactless innovations across all the industries and fintech will be one of them. The question is how the businesses will adopt them.