Customer Demand Is Driving Contactless Payments for SMBs

It took a pandemic to get consumers to buy into contactless payments. Now, small- and medium-sized businesses (SMBs) are scrambling to implement the technology and find innovative ways to use it to thrive in today’s new normal. RJ Horsley, president of SpotOn Transact, Inc, sheds more light on the situation. 

Adversity frequently drives innovation, and that’s exactly what has happened with the adoption of contactless payments in response to the COVID-19 pandemic. In this particular case, contactless payment technologies are not necessarily new. Instead, the sudden demand from consumers for contactless options is driving the innovative ways in which SMBs are implementing the technology.

Why Contactless and Why Now?

In the early days of the pandemic, little was known about the spread of the COVID-19 virus. The initial preventative measures recommended by the Centers for Disease Control (CDC) and the World Health Organization (WHO) emphasized the importance of handwashing and avoiding coming into contact with frequently touched surfaces, including cash and cards. This led to a sudden surge in the usage of contactless payment methods. Now, consumers and businesses alike have come to appreciate the time-saving benefits contactless technology offers, and most are planning to continue using it after the pandemic is over.

How Much Have Contactless Payments Grown?

Near field communication or NFC contactless payment methods, such as Apple Pay, Google Pay, Samsung Pay, and Fitbit Pay, have been around for some time. But before the pandemic, usage rates in the U.S. were consistently below global adoption rates at roughly 10%, according to MastercardOpens a new window . 

After the onset of the pandemic, Mastercard subsequently reported a near-immediate 40% increase in contactless usage. A separate survey Opens a new window by NMI indicated that 70% of people planned to continue using contactless payment methods even after the pandemic passed.

Meanwhile, other types of contactless payments have seen a similar surge in popularity. According to a PYMNTS.com surveyOpens a new window , the number of U.S. consumers ordering meals online from restaurants jumped from 13% to 21% between April and May of 2020, with a similar jump in consumers buying retail goods online from 29% to 36%. Even QR codes have made a huge comeback, enabling restaurants to provide a contactless ordering and payment experience for dine-in guests.

Learn More: The Rise of Digitalization in Fintech

How Are Different SMB Verticals Innovating With Contactless Payments

SMBs in various business sectors, including restaurants, retail, and professional services, have adapted to the “new normal” and found success by taking a diversified approach to contactless payments to create multiple revenue streams. Here are different approaches that have proved successful in each business sector so far.

Restaurants

Initially, many restaurants were forced to close for on-premise dining due to the pandemic, so the focus was primarily on enabling online ordering for take-out and delivery. This led to a remarkable 27% increase Opens a new window in revenue for restaurants in April 2020, after a devastating March when the pandemic struck. Since then, the restaurants that have been proactive rather than reactive have seen great success, specifically by implementing the following contactless solutions:

• Online ordering enables guests to order takeout and delivery from a mobile phone or computer, directly integrating to the restaurant’s POS system.
• Curbside pickup with wireless, NFC-enabled payment terminals and card readers that accept contactless payments.
• Customer-facing displays with NFC-enabled card readers for quick-serve restaurants, delis, and other restaurants with counter service.
• Dine-in mobile ordering, where guests scan a QR code at the table with their phone, then order and pay without ever touching a menu or credit card.
• QR code on receipt for guests to pay without contact at full-service restaurants.
• Pay-at-the-table using handheld POS devices with NFC payment capabilities for full-service restaurants that want to continue to provide traditional white-glove service.

Learn More: The Pandemic Forced Finance Teams To Finally Fix Inefficient Processes

Retail

Retail locations that relied solely on brick and mortar sales were hit the hardest when the pandemic started. Still, like the restaurant industry, they were quick to leverage various contactless payment technologies to create new ways for their customers to shop, including:

• Ecommerce to sell their products directly from their business website.
• Local delivery and curbside pickup using wireless, NFC-enabled payment terminals, and card readers.
• Subscription packages using online invoicing and recurring billing through a virtual terminal.
• In-store payments with POS systems equipped with NFC-enabled card readers.

Professional Services

The impact of the pandemic on service-based businesses has varied widely among SMB business sectors. Some businesses, such as accounting and law firms, were more easily able to provide uninterrupted service to clients remotely, while businesses like salons and barbershops were forced to close their doors due to government mandates. Similar to retail locations, these service businesses have had to get creative with contactless revenue opportunities, including:

• Remote services, care packages, and online classes/tutorials using a virtual terminal with recurring billing and online invoicing capabilities.
• In-person payments with NFC-enabled payment terminals and card readers.

While the pandemic has not yet ended, 2020 showed us that customers have been willing to embrace contactless payment technology. Perhaps more importantly, they’re eager to support local SMBs. 

Meanwhile, SMBs have discovered the huge time- and cost-saving benefits of contactless technology, as well as the new revenue opportunities available to them, meaning that contactless payments are likely here to stay.

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