Contactless payments will miss the boat without 'in time' funding
Authorization is the heart of payments. The decision to accept or deny an authorization request is the most critical step in every transaction flow.
Yet for decades authorization was handled by third parties, remaining beyond the reach of the companies who sponsored payment cards and were responsible for funding the transactions.
Digital wallets arguably reached a tipping point this spring when contactless payments jumped 40% in response to concerns that cash and payment terminals were helping to spread the coronavirus. Instead of dipping or swiping a payment card, shoppers simply held devices containing a digital wallet — typically a smartphone or watch — next to the payment terminal and approved the transaction at arm’s length.
This behavioral shift created a challenge for companies that had previously relied on traditional payment cards to pay vendors and workers or to generate business with incentive and rewards programs. Only an end user could insert their cards into a digital wallet and doing so involved a cumbersome manual process. Meanwhile, DoorDash, Instacart, and others who have switched to modern payment card technology were able to provision new cards — whether they were virtual or physical — directly to digital wallets. This flexibility is an example of what all businesses can expect to see from payment technology in the future.
On-demand delivery companies were among the first to adopt modern payment technology, and their experience illustrates some of the benefits that enterprises can look forward to as they transition to new, more flexible payment instruments. The era of one-size-fits-all payments is over.
Industries as diverse as retail and healthcare have begun leveraging customizable payments to grow revenue and market share. Cards are being created for every kind of transaction, and this is only the beginning. A new payment playbook is being written by some of the world’s most innovative companies, with many chapters still to come.