By: Zhane Isom | August 10, 2023

As the demand for contactless payment continues to grow, retailers are enhancing their systems while keeping an eye on data security.

When COVID-19 arrived in March 2020, retailers rushed to implement contactless payment options to keep shoppers and employees safe. Three years later, customer demand for contactless payment continues to increase given its speed and convenience.

To accommodate the increased use of contactless payments, retailers are enhancing or upgrading their systems while taking data security into consideration to keep customers’ information safe.

It is estimated that the global contactless payment market will be valued at $90.6 billion by 2032, up from $22.4 billion in 2022. It is expected to exhibit a compound annual growth rate of 15.4% during the forecast period 2023 to 2032, according to Market.US’s Global Contactless Payments Market Report.

Technological advances and retailer adoption are expected to help spur growth in the segment.

“Simplicity, which goes hand in hand with speed, is the most important feature for customers,” said Perry Kramer, managing partner for retail management consulting firm Retail Consulting Partners. “This is often best facilitated by allowing the customer to tap before the conclusion of entering the items, and by minimizing the excessive questions that many retailers clutter their payment terminal with at the time of checkout.”

At Pete’s Convenient Stores, which has 53 locations in Missouri, Kansas and Oklahoma, more customers are using its Express Lanes for self-checkout because they’re convenient and get them out the door faster. The Express Lanes accept cash, credit and EBT (electronic benefit transfer). The c-stores also feature scan-and-go, which customers can use to scan and pay for their purchases through their smartphones. Both offer a contactless solution in the sense that customers don’t have to interact with employees.

“We found that the customer likes to have both cash and credit options. They also want to have the capabilities to pay for fuel through the Express Lanes,” said Brenda Elsworth, chief operating officer for Pete’s Convenient Stores. “In some of our stores, a second and third Express Lane were installed as customers preferred the Express Lanes.”

Elsworth has also seen an upward trend in customers’ use of contactless payment and a downward trend in lines at the point of sale, which has caused the convenience store to enhance its contactless payment systems.

“We are banking our Express Lanes together at the main pay spots, and we are also running more promotions online to incentivize the customers to use our online payment system,” said Elsworth.

The New Normal

Now that contactless payment is offered in most convenience stores, customers are more frequently seeking it out over more traditional forms of payment at the register.

“We have reached a tipping point with customers that they now see some type of contactless payment as a default process,” said Kramer. “It could be a contactless credit card, QR code on a phone, Apple Pay or Samsung Pay. This has been driven by the expansion of contactless hardware and software into almost all retail locations.”

Nonetheless, Kramer noted that even though most stores have contactless payments, some retailers still have not fully adopted the technology. Some retailers have been slow to adopt the technology because they want to get every use out of their payment hardware and have little desire to deal with the challenges that new highly complex software brings, he suggested.

Considering Data Security

Since contactless payment has become customers’ go-to source of payment, retailers have to start considering improving their data security to keep customers’ information secure when using contactless payment.

“All of our credit information is run through our P66 processor, which allows our customers’ card information to stay safe and secure whenever they use one of our contactless payment systems,” said Elsworth.

Kramer suggested retailers should focus on using payment tokens whenever possible and invest in modern payment systems at every point in the payment ecosystem. He also noted that retailers should avoid building custom solutions and leverage mature products.

“Like most software and products, there is a need to maintain operational efficiencies to support the security process,” Kramer said. “This includes patching and maintaining upgrades for all software and hardware and showing endless due diligence.”

“Take data security seriously,” added Elsworth. “Have a security analyst run tests and ensure you are protected, as well as your customers.”

The Future of Contactless

Contactless payment is expected to continue to rise in popularity at c-stores as consumers continue to prioritize speed and convenience while in the store.

“We think contactless payments, whether through online, mobile devices or express lanes, will only grow,” said Elsworth.

Overall, convenience store retailers should continue to improve their contactless payment systems and data security to keep up with technology and customers’ needs.

“Contactless payments will continue to evolve in the quick-service restaurant and convenience store vertical faster than in other areas due to the ever-increasing need for speed and convenience in these verticals driven by labor shortages and the consumers’ need for a frictionless experience,” said Kramer. “Retailers will continue to try and use mobile applications, (QR codes and near field communication on phones) to link payment tokens with customer rewards, memberships and basic customer relationship management identification, merging tendering and customer capture into a seamless and rapid process.”

Source: CStore Decisions