Jul 02, 2024

Convenience, Security and Reliability: Three Factors Driving a Payments Paradigm Shift

NFC Forum recently published the findings of its bi-annual Contactless Usage and Adoption Study[1]. The report showed that while physical cards were ranked as the top single method of contactless payment by 45% of respondents, the majority (55%) now prefer device-first options including smartphones and watches.

Contactless card usage remains strong largely due to built-up trust over years of experience using them to make both contact and contactless payments. There is, however, a clear payments paradigm shift taking place, with increased consumer usage and preference for mobile wallets. Of those surveyed, 95% have left their physical wallet or purse at home on at least one occasion, choosing instead to rely solely on mobile payments; 53% confirmed they do so multiple times each week.

So, what exactly is driving consumers’ increasing preference for paying with their smart devices over other, physical payment options?

1. Quick, convenient payments

NFC contactless payments were ranked as the most convenient payment method in the study by 39% of respondents, followed by QR code (28%), contactless card (20%), and cash (13%). Gone are the days of needing to carry cash or a wallet holding multiple credit and debit cards. Consumers can instead use something they already have with them – either a smartphone or watch for example – to make a quick and easy payment. Convenience is increased by biometric authentication, removing the added step of inputting a PIN if a transaction exceeds the contactless limit – users can always simply tap and go. No wonder then that NFC digital payments were also ranked as easiest to use by 42% of respondents, followed by QR code payments (29%), contactless card (16%), and cash (12%).

2. Added security with every tap

Smartphone and wearable payment solutions benefit from the additional security biometrics bring to every payment, verifying the user’s identity even when a transaction is below the contactless limit. Perhaps this is why 71% of survey respondents said they are either confident or very confident in the safety and security of mobile payment wallets. In fact, 38% of respondents ranked NFC contactless payments as the most secure payment option, followed by QR code (28%), contactless card (19%), and cash (15%). Unlike cash or physical payment cards which can be lost or stolen and used to make fraudulent payments, mobile wallets offer customers an additional layer of security, without sacrificing convenience.

3. A reliable way to pay

When it comes to reliability, cards are still a trusted way to pay; however, NFC contactless payments were ranked as the most reliable method by 31% of respondents, followed by contactless card (25%), QR code (23%), and cash (20%). This aligns with the takeaway that digital wallets are complementary to cards and that the two payment methods are trusted as reliable options by consumers. This trust is built up over years of experience, and as people use their smartphone or wearable devices to pay more often, the perception of reliability will continue to increase.

As usage of NFC contactless payments continues to increase, so too does familiarity and trust in the technology itself. In fact, 73% of respondents said they already regard themselves as familiar or very familiar with it. This is driving demand for additional applications and use cases of NFC beyond payments, including multi-purpose tap – where consumers can complete multiple required actions in a transaction in a single tap – and using the technology to improve sustainability in line with emerging regulations. Just as there is a current paradigm shift from physical to device-first payments, expect to see NFC’s security, convenience and reliability help broaden future use of the technology to deliver transformative solutions across a wide variety of industries.

Download the full study / listen to our recent webinar on the findings to learn more.

[1] Conducted by ABI Research