Contactless payments: A foundational shift for merchants

7 minute read

Consumers now expect digital to be part of their banking lives. In response, merchants have moved toward entirely cashless models, taking advantage of improvements to the acceptance infrastructure, like network tokens and enhanced near-field communication (NFC) capabilities.

Contactless payments have moved from convenience to standard. Consumers prefer tap-to-pay because it’s easy, fast and secure. In fact, global infrastructure is now fully “tap-ready,” with 89% of global POS terminals accepting contactless payments.¹

• New York City has fully replaced MetroCard with OMNY (One Metro New York) as its contactless fare payment system for public transit.

• By March 2025, 65% of riders used contactless.

• 85% of full-fare and 55% of reduced-fare riders now tap-to-pay.

For many businesses, the shift is more about operational readiness than adoption trends. While some merchants are fully equipped, others are still in transition. But getting started doesn’t require a full transformation — it can begin with a few key steps:

1. Assess your acceptance capabilities
2. Prioritize the enhancements that will have the most impact
3. Reinforce the availability of contactless at POS
4. Ensure your plans are scalable

Also consider that smart phones have essentially become contactless payment terminals that don’t need any additional hardware or peripherals. Adoption of tap-to-phone technology is surging, with Visa reporting 200% year-on-year growth.⁴ By 2030, over half of in-store spending (53%) is expected to be done on mobile devices, and QR codes are already an established part of the payments infrastructure as companies and merchants have become more technology proficient.⁵ This increased payment optionality means that payments can be accepted by businesses ranging from micro merchants to sports stadiums.

Digital wallets are expanding their capabilities beyond payments. The ability to do things like store your driver’s license in Apple Wallet shows how they’re becoming part of everyday life. They’ve moved from being a simple way to check out at a store to something that people can use to prove who they are, access services and handle simple daily tasks.

Adoption is growing across all age groups, driven by biometric security and easier setup, and solutions that simplify and secure online transactions are playing a key role in this. One example of this evolution is Paze®. This simplifies online checkout by eliminating manual card entry. Offered by Bank of America and other leading banks and credit unions, Paze combines eligible debit and credit cards into one wallet, with added security through tokenization so that actual card numbers are not shared with merchants. With more than 165 million cards added and a growing list of merchants, Paze delivers a fast, easy and convenient checkout experience for everyday spending.⁶

“Financial institutions are well positioned to continue to drive adoption within digital and contactless payments, and innovations in the space are emerging all the time,” says Parks. Developments to watch include:

• Tap-to-own-phone — piloted by Visa, this gives consumers the ability to pay for online purchases by tapping their physical card on their own NFC-enabled Android, removing the need to manually enter card details.⁷ It’s a significant change in the payments ecosystem as it allows for a card-not-present ecommerce transaction to be processed as card-present, securely leveraging the consumer’s phone as a personal payment terminal.
• Tap-to-confirm to authenticate high-risk actions.
• Tap-to-activate to confirm card activation.
• Tap-to-add-card — this adds a card to a digital wallet with just a tap, without the use of a key entry or phone camera.
• Tap-to-phone at ATMs — Bank of America offers contactless (NFC)/cardless ATM access, allowing consumers to tap their phone instead of inserting a physical debit card.

For merchants, digital payments are more than a trend to keep up with. They’re about meeting customers where they are and providing a fast, simple checkout while keeping lines moving and sales flowing. It comes down to this — if you don’t offer easy, contactless options, you create friction that could cost transactions and deter repeat business.

¹ Datos Insights. The Changing Face of Global Card Payments.

² PYMNTS, Visa: 80% of Face-to-Face Transactions Internationally are Tap to Pay.

³ MTA, MTA to Sunset MetroCard Sales at End of the Year.

⁴ Visa, Visa Tap to Phone Adoption Soars: 200% Year-over-Year Growth Worldwide.

⁵ WorldPay, GPR 2025. The past, present and future of consumer payments.

⁶ Paze® and the Paze related marks are wholly owned by Early Warning Services, LLC and are used herein under license.

⁷ Visa, Visa launches new disruptive payment solution in Latin America and the Caribbean.

Apple Pay is a registered trademark of Apple Inc.

Google Pay is a trademark of Google LLC.