Whether it is the current European political volatility or the emergence of disruptive technologies, companies are spotting new opportunities in the transforming world. This is certainly true when it comes to payments, and the perfect example is the success of contactless payments where nearly one in two payment transactions in Europe are now contactless with a 97% increase in contactless transactions year-over-year1. Despite the uncertainty that comes with change, forward-thinking businesses are reaping the benefits from technological advances to achieve greater efficiency and convenience.
The adoption of contactless payments
Change in the corporate sphere is closely related to what is happening with consumers. Still, there tends to be a lag between the two: Innovations are usually developed in one sphere, and take some time to be introduced and implemented in the other. However, for the types of innovation that usually begin among consumers, the lag is shrinking. Employees are increasingly combining business and leisure travel, and as people get accustomed to new innovations as consumers, they are starting to expect the same capabilities in a business context.
A clear example of this is the increased popularity of contactless payments in a business context. Due to the contactless limit, not every business transaction can leverage a contactless feature but it is attractive for low-value payments. For example, travelling around London is more convenient with contactless payments, since contactless bankcards are effectively replacing legacy contactless travel cards (Oyster card) on trains and buses. There has also been a rapid growth of contactless payments in general, as evidenced by the fact that contactless overtook Chip and PIN to become the most popular form of card payment for in-store transactions in the UK2. Following this change in demand, increasing numbers of issuers are offering contactless commercial cards not only in Europe but globally.
Opportunities and challenges
Change involves both opportunities and challenges. One of the immediate concerns we hear from clients is that of reconciliation, and whether it’s easy to approve business expenses made via contactless transactions. However, barring a few exceptions, most merchants still provide a receipt for contactless transactions. Moreover, many companies have embraced the changing travel environment and adapted their T&E policy to not require employees to submit receipts for low-value transactions. In this way, the company’s requirements are met, while business travelers can enjoy the convenience enabled by the quick tap of a contactless card.
The next big area of change is the use of mobile wallets for business expenses. Not only are mobile devices useful for access to and exchange of payment-related information, but they also have a huge potential when it comes to the payment process itself. Many have already embraced mobile wallet solutions on the consumer side, and companies are following closely behind. According to David Voss, head of Commercial Cards, Global Transaction Services EMEA, at Bank of America: “Mobile devices have the potential to replace the physical payment card in the coming years.” Moreover, payment via mobile wallet also adds security to the list of gains from technological development. Beyond the ease of not needing a physical card, they entail great possibilities when it comes to authentication and tokenization. Using biometric data like fingerprints or facial recognition, payments can integrate with, and enable better security in, the eCommerce environment. In addition, mobile wallet transactions do not have a contactless limit and offer increased security over traditional card payments by using a tokenized account number, meaning the actual account number is never stored within the mobile device nor presented to a merchant to complete the transaction. Currently the highest usage country is China at 36%, more than 6 times the nearest rivals but the global adoption is expected to continue3.
Closing the gap
As is often the case, the real challenge is adapting to change. Familiarity is a big part of why old habits die hard. As more consumers embrace this change, the challenge will become even easier for businesses to overcome. The gap is closing between consumer and corporate behavior, enabling businesses and business travelers to enjoy the increased efficiency, visibility and security made possible by advances in technology.
1Mastercard Newsroom, “Europe leads contactless adoption as almost 1 in 2 transactions are now contactless” - September 2018
2Finextra, "Contactless overtakes Chip and PIN for in-store transactions" - October 2018
3Payments Cards and Mobile, “Global mobile wallet usage mapped” - February 2019