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How contactless pay is shaping the future of retail

As consumers abandon cash, contactless pay is gaining traction. So what might a cashless society look like, and what will it mean for small businesses?

One in every five card payments made in Europe today is contactless. With payment readers becoming increasingly reliable and affordable for small businesses, our retail environment is being transformed. So what can we expect from a world without cash, and how can merchants benefit from contactless payment?


Cash is on the way out


According to the Reserve Bank of Australia, in 2016, cash accounted for just 37per cent of transactions that year, compared to 47 per cent in 2013 and 69 per cent in 2007. Unsurprisingly, cash withdrawals also declined. In fact, the Commonwealth Bank reported in 2016 that ATM transactions fell 6.4 per cent.


Debit and credit cards remain the most popular replacements for notes and coins, but it's only in recent years that card transactions have become more efficient. The ability to pay without inputting a PIN or scrawling a signature is a relatively new development, but the public quickly embraced it. The real game-changer, however, could be the emergence of smartphone-based payment technologies like Apple Pay and Venmo.


Mobile wallets


This tech comes in the form of mobile wallets that are based on near-field communication (NFC) technology and peer-to-peer (P2P) payment systems. It allows the instant transfer of money from one bank account or credit card to another. For phones that don't have built-in NFC, some banks now provide electronic payment tags that can be stuck to the back of a phone case. Wearables have also joined the fray, with integration of NFC into smartwatches enabling consumers to pay for goods and services seamlessly.


For consumers, contactless pay makes shopping more convenient. It also makes it easier for individuals to track their spending habits. For example, AmEx cards sync with both Apple and Samsung pay, so you can monitor your budget from your smart device while completing transactions with ease.


Benefits for small businesses


A key benefit of the NPP will be the near-instantaneous transfer of funds from contactless payment points to financial accounts – even when the payer and payee have accounts with different banking institutions.


Contactless payment can help shops, cafes and retail stores improve their productivity while providing a more convenient and flexible customer experience. Imagine buying a copy of The Big Issue from a street vendor with a simple tap of your phone, or paying for a coffee without leaving your table.


Perhaps best of all, contactless payment frees the business from the hefty security costs associated with cash handling and storage.


A world without cash


Most of us already pay for a range of goods and services without physical cash changing hands. Moreover, all Australian toll roads have operated on a contactless cashless system since 2013.


As contactless pay becomes increasingly popular, we can look forward to a future that is not just cashless, but cardless. With Google currently testing a payment technology based on facial recognition, it may even become deviceless. For businesses that have not yet embraced the contactless payment model, now is a good time to start planning for a world without cash.