Innovations in payment transaction technology are going to have an effect on retailers, consumers and the big credit card bank companies. Here are three big trends to watch out for in 2018:
Contactless payments technology has been introduced and is slowy gaining steam in the retail sector. You can use contactless payment with credit cards or smart phones that have chips implanted with radio frequency identification, commonly referred to as RFID, according to Forbes. As a consumer, imagine being able to wave your card or smart phone rather than having to “swipe” the card through the terminal. That is the beauty of this technology.
The global contactless payments market is expected to reach USD 2.23 trillion (transaction value) by 2025. If you think about it, contactless payments transactions work well in places like airplanes where swiping a credit card in a machine is cumbersome and inefficient.
Contactless payments are directly integrated with the payment provider and require a simple timed ‘tap’ of the payment device/card onto a specially linked ‘Contactless reader’ to initiate such payment; usually under $20 or £15 for security reasons.
The retail sector will truly benefit from enabling contactless-based payments, as the system is easy to integrate and is linked directly with existing POS (point-of-sale) systems used by businesses and retail environments daily.
Mobile and smartphone users will also benefit heavily as many vendors are readying their devices to be outfitted with technology to take advantage of this contactless payments. For example,Samsung Pay, Chase Pay, Android Pay, Microsoft Wallet, Walmart Pay, and Kohl’s Pay all offer consumers a way to pay with their phone and leave their wallet at home.
You may be wondering if contactless payments are safe? Well, the good news is – yes. The ability to check transaction history and view virtual receipts at a glance eliminates the risk of fraudulent transactions, as well as simplifying the payment and shopping experience.
Swipe Fees – More or Less?
In late 2012, a $7.25 billion settlement between credit card companies – including Visa, Mastercard and more than a dozen major banks – and a coalition of 19 retailers resulted in some major changes for retailers and credit card companies.
The retailers’ lawsuit alleged that Visa and Mastercard engaged in collusion with the banks that process credit card transactions in order to maintain artificially high interchange fees – also known as “swipe” fees – which are charged to retailers every time a credit card purchase takes place. Interchange fees have become an extremely profitable source of income for credit card companies. Because retailers usually absorb these fees, customers for the most part were not aware of these fees.
Those days may soon come to an end. Retailers have become increasingly frustrated with credit card processing fees, which have managed to remain relatively high despite decreasing technology costs. With the settlement of the lawsuit, retailers will now have the option of passing on the costs of the interchange fees to consumers through higher checkout fees. For businesses seeking to maximize growth without the need for a business loan mobile payments are the wave of the future.