What can FinTechs learn from contactless payments?

By Julian Sawyer, Managing Director for Europe, Gemini
The recent boost in the use of contactless payments reminds us that consumer behaviour is motivated by necessity, efficiency, and convenience...

The recent boost in the use of contactless payments reminds us that consumer behaviour is motivated by necessity, efficiency, and convenience.

Even before the pandemic, the factors that led to the spread of contactless payments teach important lessons about how to move the needle from early adopters to mainstream consumers to global proliferation. 

The technology behind contactless payments has existed since 2007, but only took hold in the UK in 2014, when Transport for London introduced Contactless Transit on tube and rail. By 2019, travelers were taking more than two million average daily journeys across the network by tapping in and out with their cards and phones. The programme’s popularity caused it to be implemented in transport systems globally and drove mass usage of the technology in other areas like retail. 

Aside from solving unforeseeable global problems, what does this mean for other fintechs trying to supercharge adoption? To start with, for any innovation to reach sustainable growth, certain building blocks must be in place. Good compliance and security programmes must ensure prudent measures are protecting data and capital. Skillful teams and the right culture facilitate the development and delivery of exciting and reliable products. Marketing and communications in combination with product development get users flowing through the platform. 

Beyond these fundamentals, assuming valuable technology exists, the key to winning is providing a real solution to a pain point in the financial system - whether in currency markets, trading products, current accounts or elsewhere - and communicating that. As with contactless payments, however exciting the technology, it will thrive only once customers can see an obvious use case that directly benefits them. The value can be as simple as being more useful, more universal, less expensive, more convenient, or more efficient than existing solutions.

Looking to the future, there are many fintech innovations poised to make an impact in the future global financial system, perhaps none more exciting than blockchain technology. Again, while the technology is interesting in itself at a technical level, in reality, the majority of the end users will be moved to use it when they can see the value it brings to their business, daily activities, or personal lives. 

In the payments sphere, for example, global businesses are exploring the use of decentralised digital currencies pegged to fiat — known as stablecoins — to send and receive money over the internet, lowering costs and increasing speed. Consumers conducting remittances, which are often expensive to send and cumbersome to collect, can do so more quickly, virtually, and cheaply with crypto. Merchants are seeing value in accepting no-cost crypto payments in countries with high credit card transaction fees. Most consumers interacting with these products will not even be aware the transaction has been facilitated in a new way - they will just be interested in the improved experience. 

Fintech continues to open up new possibilities for consumers and institutions to manage their money better. However, the adoption of new products and services still rests on the clarity of their value proposition. The rise in contactless payments in London’s underground system and during the pandemic is a reminder that solving problems in the customer’s eyes is as important as the quality of the technology that powers new services.

This article was contributed by Julian Sawyer, Managing Director for Europe at Gemini.


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