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Contactless vs. cash: The three C’s

Only a few years ago, you would have most likely paid for your morning coffee with cash. And why not? Who would pull out a card, swipe, wait for it to be processed and sign a receipt when they could just use a $5 note?

Fortunately, the coffee shop of a few years ago is not the shop of today. Now, it’s easier than ever to pay for just about any everyday purchase in an instantaneous ‘tap’. Australians have embraced contactless transactions – nearly three in five now have a contactless card and 40 per cent of Aussies use their contactless card regularly.

From banks to supermarkets, contactless has infiltrated every part of our lives. Each of Australia’s major banks has rolled out contactless cards, with more than 12 million now in circulation. Whilst cash still accounts for 70 per cent of transactions here, its role in our economy is declining. Forward-thinking companies have embraced “tap and go” technology and are already reaping the benefits.

For businesses that might be considering adding a contactless point-of-sale (POS) terminal in-store, or brands exploring whether or not to develop a contactless NFC (near-field communication) solution for their customers, here’s a rundown of the major benefits for businesses to choose contactless over cash:


One advantage of contactless technology is the ability to offer customers faster and more efficient payment method. Instead of digging for coins or heading to the ATM for cash, consumers simply wave their card or NFC device near the reader to make a payment that is processed up to three times faster. That means shorter queues, more efficient checkouts and happier customers. With more than 100,000 contactless POS terminals across Australia, it’s easier than ever for consumers to get the items they want more quickly and easily.

Supermarkets are the most popular venue for contactless payments in Australia. Coles was the first Aussie supermarket to launch MasterCard’s PayPass terminals in 2012 and saw a 70 per cent increase in contactless payments over the last year. They have since increased their investment in contactless payments, launching the “Coles Pay Tag” NFC sticker in 2013. Shoppers simply attach the sticker to their mobile phones and tap at checkout for payments without pulling out a card or cash.

Competitive Advantage

Businesses who embrace contactless technology also have the opportunity to reach their customers in new ways. One study found that 45 per cent of Australians purchased a product or service with their smartphone last year, and 28 per cent used online coupons for shopping. Companies can leverage contactless and NFC technology to gain the trust and loyalty of consumers who are exploring new ways to shop with their mobile devices and provide a more integrated retail experience.

Mobile payment solutions have the ability to function as a real-life wallet, keeping track of debit cards, vouchers, receipts, coupons, and loyalty cards. The ability to accept mobile phone-based contactless payments opens up a multitude of marketing opportunities and improves integration with existing loyalty programmes. When consumers can make purchases, earn points or rewards and sign up for promotional offers through one card, NFC sticker or NFC-enabled smartphone, there are more opportunities to collect marketing data and connect with consumers on more personalised levels.

Customised Security

Consumers want security whether they are shopping online, in-store, whilst travelling or on the street.

Contactless payments employ advanced security features that are more secure than old magnetic strip cards. The financial networks used to process contactless transactions are the same as the ones used to process traditional cards but with contactless cards, radio frequency (RF) technology sends information to the POS terminal instead of requiring a swipe. Financial networks have designed multiple layers of security to protect every aspect of the transaction.

Mobile NFC payments utilise the same physical security mechanisms found in contactless cards with additional security layers and certifications backed by Visa and MasterCard. Additionally, consumers can also choose to authenticate transactions of any size with a PIN code. Certified third-party service managers handle the payment applications remotely in secure data centres and can immediately block a payment application in the event a device is lost or stolen, similar to blocking a bank card.

The increased convenience, efficiency and security, coupled with opportunity to provide more integrated retail and marketing experiences makes embracing contactless technology a necessity for Australian businesses, particularly as it becomes more widely adopted by consumers. The phasing out of signature verifications beginning this June will further encourage the use of contactless cards over cash. In fact, by April of this year, all MasterCard cards in circulation in Australia will be contactless and all MasterCard-accepting merchants must accept contactless payments.

Whilst cash might always serve a purpose in our economy, it is predicted that more Australians will be “tapping” instead of “digging” for dollars.

About the Author

Michael Zerelli, Vice President, Oceania – Gemalto

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