To Succeed in Retail Means Embracing the Contactless Revolution

As the contactless economy grows, consumers now expect smooth, hassle-free digital experiences when making purchases.

“It’s not just about looking into the future anymore. This is about offering solutions that consumers expect today,” Julie Malikayil, senior manager, payments products at Discover® Network, told PYMNTS.

Contactless transactions, supported by innovations like mobile wallets, tap-on-mobile  and open-loop transit payments, are becoming the expected go-to method of payment. For younger consumers raised on smartphones and accustomed to digital convenience, the ability to pay anytime, anywhere with a simple tap has shifted from being a luxury to an expectation, as they increasingly demand speed, security and ease of use.

“If you don’t support contactless, you may be missing out on business,” Malikayil said. “Technology is moving faster than [businesses] can keep up with.”

For merchants, this shift has required investment in point-of-sale (POS) systems that could support next-generation capabilities. For providers and stakeholders, it has created a runway to deliver platforms that seamlessly integrate with customer management and data analytics tools.

To stay ahead, businesses need a customer-focused payment strategy that incorporates contactless into the customer experience. It is imperaitive to consider the power of integrating this contactless experience with back-end systems like inventory, customer relationship management (CRM) and loyalty platforms.  Ultimately, these solutions lead to a more real-time, personalized and satisfying customer experience.

Securing the Merchant Modernization Mandate

Speed and ease can be a double-edged sword when it comes to payment security, but that’s not the case with contactless payments. Technologies like EMV chips and near-field communication (NFC) have become standard practice in delivering encrypted, tokenized transactions that help prevent fraud and safeguard personal data.

“Customers can feel comfortable that their contactless transactions are just as secure as the contact-based transaction that they are used to,” Malikayil said.

Mobile wallets, for example, use tokenization, which means “your personal card information is never shared openly during a payment transaction,” Malikayil said. “Solutions are leveraging small computer chips … that generate dynamic and unique transaction codes for each payment.”

Behind the scenes, the Payment Card Industry Data Security Standard (PCI DSS) governs every step. These technical safeguards translate into consumer trust — the intangible currency of the digital economy.

The Consumer Is the Compass for Future Payments

As for what’s next in the contactless revolution, Malikayil sees promise in an emerging concept known as “tap to own.”

“It’s a transformative way to improve fraud [prevention] for eCommerce and in-app transactions,” she said.

The idea? Consumers tap their own card to their own device to check out, essentially embedding the benefits of EMV/NFC technology directly into online or mobile purchases. But the marketplace’s innovation doesn’t stop at tap to own, and concurrent advances such as artificial intelligence (AI) are poised to play an equally significant role across future payments ecosystems.

“The capabilities that AI introduces are going to affect everything that we do today,” Malikayil said, noting that AI-driven analytics can enhance fraud detection in real time, optimize back-end systems and even personalize the front-end experience.

“Understanding the nuances of how customers engage with payment systems, how that can change over time, and then making sure that you have a business plan to incorporate that [is key],” she added, stressing that embracing a holistic approach requires merchants to think of payments not as a transaction, but as a touchpoint.

For merchants and technology providers alike, the message is clear: Innovate relentlessly, integrate strategically, and, above all, listen to the consumer. Because the future of payments isn’t about plastic or chips or even AI. It’s about people.