Retail & The Rise of Contactless

I’m spending time with leaders in digital, IT and product to showcase their expertise and industry knowledge.

I recently caught up with Kamlesh Lad, who’s been at the forefront of digital innovation having delivered some key transformation projects, and implemented apps and websites for a range of leading global brands across retail and other industries.

We have seen the rise of contactless over the years including Android and Apple wallet, and an influx of neobanks with amazing ideas such as Afterpay and Zip Money. What do you think are the most significant  changes in payments recently?

Kamlesh: With the growing rise of cashless payments being made both globally and here in Australia, it’s becoming a norm for consumers to pay by tapping their payment card or their mobile device when going into stores.

With the event of the recent pandemic, there has been a significant increase in online shopping, forcing consumers to pay online via card, PayPal or Afterpay, making it easier for the consumer to part with their hard-earned ‘cash’ or ‘cashless’ in this case. Consumers are trying to minimise the risk of being infected by the virus or passing it on through the exchange of cash when shopping in stores, with consumers preferring the ease of cashless payments, leading to a  reduction in queue sizes at ATM machines.

We’ve seen a rise in cyber attacks since the COVID 19 pandemic,  how do we minimise the risk of fraud within contactless payments and apps?

Kamlesh: The recent pandemic has seen a reduction in consumers going into the shopping malls and bricks and mortar  retail stores, and an increase in people buying online in the comfort and safety of your own home. Online shopping is becoming more popular as there are an increasing number of delivery options that online stores can use, and more payment methods allowing customers to buy now and pay later like Afterpay.

To help with consumer data security and payment details, retailers are introducing fraud detection solutions, and third party payment providers are carrying out penetration testing to  prevent hackers from capturing private customer data and payment details.

Third-party providers receive payments from consumers, then verify that the funds are available and debits the consumer's account. Retailers are also making sure their payment gateways are Payment Card Industry Data Security Standard (PCI DSS) compliant. This standard has been developed to help protect customers, staff members and suppliers from fraud and identity theft by ensuring that payment data is handled securely throughout all transactions and interactions including Point of Sale (POS) systems, fax, phone, online orders and email communication.

With cashless payment methods growing, consumers need to feel safe with security and fraud measures in place while they quickly and easily make their purchases. Retailers have also  implemented 2-factor authentication for payments with customers using their payment device and Touch ID.

We've seen businesses refuse cash payments in recent months to minimise the risk of COVID. How do you think this has impacted the rise of contactless within retail?

Kamlesh: Consumers are shopping more online which is taking the emotion out of the payment part of the transaction, and placing  more emphasis on the product they are buying. Payments made through PayPal, Afterpay and other payment services is making it easier for the consumer to part with their money. This is making online content a more critical part of the buying process so that consumers are more emotionally attached to the product or service that they are buying, rather than the cost.

Those consumers who are savvier online will do their research and find the best deals and products using ratings and social influencers. We seem to be moving from a cash is king to a content is king mindset where retailers with eCommerce stores and social media platforms have put more emphasis on videos and photos of the products and services to tap into the consumers’ hearts and minds.

Instore great customer service and interaction are important, online this is non-existent, so the only way customers can get a more sensory experience is through video content. This is why the increase in using social media as part of the online experience is becoming more popular for retailers selling products and services. The use of influences on social media with a high number of followers is persuading consumers to buy more online, and pay via online payment methods, making transactions easier and quicker.

We’ve seen that there has been a reported 72% increase in the use of FinTech apps in Europe. Banking apps in Asia and the Middle East have also announced strong growth. Now, more than ever, people are managing their money from their devices. How do you think the Australian market compares and what do you think is next?

Kamlesh: I remember going back to England 3 years ago and was surprised at the reduced number of shoppers in the mall on a Saturday afternoon. I recall as a teenager the malls were packed on a Saturday and we used to meet there with friends and buy the latest records and clothes with cash. I compared this with shopping here in Australia and how much more the Australian consumer loves the tangible experience of going into a store and talking to a friendly shop assistant and buying merchandise using payment cards or cash. In the UK, consumers are more used to shopping online, and having their products delivered to their home within days or hours of the purchase.

Compared to other western countries, the Australian consumers are more attracted to going to bricks and mortar retail stores and shopping malls, but the recent pandemic has caused an increase in shopping online. Cashless payments like ApplePay and Afterpay are diminishing the emotion attached to the payment itself, and increasing the attachment to the product or service, making it easier for consumers to part with their hard-earned cash.

Both here in Australia and around the world, consumers are expecting more seamless transactional experiences which are automated or no touch,  ‘frictionless’ is becoming a real buzz word. Customers can easily choose the purchase type (immediate, subscription-based, click and collect), payment method (digital, biometric, traditional credit or debit card) and payment channel (e.g. ApplePay, Afterpay, PayPal), providing a better overall customer payment experience.

What advances do you expect to see in retail in the future?

Kamlesh: As the use of cashless payments increases, and consumers continue using different payment methods, retailers have the opportunity to better understand the consumers buying patterns, preferences and location. This data can be captured and used to provide more personalised content when browsing online, and allows retailers to offer personalised deals. This can also apply to shopping in physical stores by linking customer’s store cards and  their payment details to make the experience more seamless.

Capturing consumer transactions both online and in stores will become more of a norm as retailers partner with other retailers, delivery companies and air miles or frequent flyer reward organisations. This data can be used to intimately know the customer’s buying patterns and behaviours. Retailers will know where they are spending their money, and how to cross-sell and upsell their own products and services as well as those from their partnering companies.

Latitude: Will we ever enter a time where we no longer use cash?

Kamlesh: There is still a tendency to use cash in smaller food and retail stores such as; cafes, bars, bakeries and convenience stores, but this will change as our next generation of consumers are more used to paying by cashless means.