Cashless after COVID-19: why touch-free transactions could see us finally say goodbye to cash
By Vince Graziani, CEO of IDEX Biometrics ASA
The impact of COVID-19 on the global payments industry is likely to be profound. McKinsey predicts that activity in the sector could drop by as much as 8-10% of total revenues due to the pandemic, a reduction of between $165 billion- $210 billion. That’s compared to the 10-11% revenue reduction seen following the 2008 global financial crash. The devasting outcomes of the pandemic have not only created consequences for our immediate lives and the economy but are already causing shifts in consumer behaviour relating to payment that will resonate for years to come.
In the payment industry, the pandemic is accelerating a shift towards a cashless economy. Back in February, before the pandemic was declared, UK Finance predicted that the UK will become virtually cashless within the next decade – which is only likely to accelerate in the current climate. Meanwhile, in the midst of the pandemic China has launched a sovereign digital currency, the eRMB, anticipating cash will diminish even further. In March, the World Health Organization advised the public to use contactless technology where possible, to prevent the spread of the disease. Since then, retailers have begun refusing cash payments and a concern around sharing potentially ‘contaminated’ cash has grown.
A reason to give up cash
It seems that while a cashless world has been on the horizon for a number of years, the coronavirus pandemic has finally given the public a firm reason to give up cash. We are currently seeing a widespread change in consumer behaviour propelling the desire for a cashless society forward – including for those who were previously sceptical of going cashless.
For many consumers, using contactless payments can provide much needed reassurance while shopping in stores during the pandemic. While these new purchase options may seem unusual for some, COVID-19 has caused retailers and consumers to seek touch-free payment alternatives. It has quickly become second nature for consumers to tap their card to pay for goods and services instead of using cash or punching in a PIN.
So, now there is significant demand for a cashless society, how do we actually get there? And how do we make sure it is secure and accessible to all?
Making payments touch-free and secure
The answer is to make all payments touch-free. We already have contactless payments, of course. The limit for PIN-free payments has even risen around the world in response to the COVID-19 outbreak, reaching £45 in the UK, €50 in all EU countries and even up to $250 in Canada– allowing consumers to make more payments without having to touch a PIN pad. But in a post-pandemic world, all payments, regardless of value, need to be touch-free to protect consumers.
And while contactless methods are the most commonly available touch-free payment option, they lack added security and authentication. As Strong Customer Authentication (SCA) grows in importance, payment methods must have two-factor authentication, as well as convenience and hygiene. But with PINs increasingly recognised as insecure and PIN pads deemed ‘unclean’, consumers are now worrying about their health as well as contactless banking fraud while making a payment.
Consumers, particularly those cautious about potential fraud from transactions without a PIN, may need a greater layer of security to overcome trust issues around contactless payments. While a signature can be forged, a PIN cracked or an online account hacked, a fingerprint is virtually impossible to replicate. Therefore, to resolve fraud uncertainty, the payments industry must adopt fingerprint biometric authorisation to provide greater security and protect consumers.
Finding the balance
Biometric payment cards provide the ideal balance of security, convenience and hygiene for transactions, without having to touch anything beyond your personal payment card. When paying for goods with a fingerprint biometric payment card, the consumer only needs to touch the sensor on their own bank card while holding it above the terminal for a contactless payment – just like they do today. This two factor authentication links the person to the payment card in a sanitary way, eliminating the incentive for theft or mis-use of payment cards.
We know that consumers want a transaction process that is fast and free from hold ups. In the age of COVID-19, increased touch-free authentication with your fingerprint will secure the payment card, removing the need for PINs and reducing the need for the payment limit, all while making the transaction process more hygienic.
Preparing for a cashless world
As the pandemic continues, and consumer’s payment behaviour continues to change, it seems likely that the UK will ultimately become a mostly cashless society sooner than we thought. But the transition must be well supported to provide all consumers with a secure and easy way to manage contactless payments.
Biometric smart payment cards are vital to help consumers overcome trust issues around digital payments. The payment industry must now adapt and adopt biometric technology to ensure that payments are stable, secure and sanitary as we finally embrace a cashless world.