Published by Jessica Weisman-Pitts
Posted on October 12, 2022
5 min readLast updated: February 3, 2026
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By Santa Kiršbauma, Board Member, Product Offering at DECTA
Over the past few years, technology giants Apple, Google, and Amazon have attracted hundreds of millions of users to their digital wallet apps. Contactless payment solutions and innovations in e-commerce are changing the way consumers and retailers interact. Physical payment cards are quickly becoming an inconvenience at best, and a safety concern at worst. For banks and traditional financial institutions, these developments are an obvious threat to the status quo.
As is the case with most technological progressions, consumers are the driving force behind the push towards contactless payments. Gen Z, unsurprisingly, has the highest rate of adoption. But other generations aren’t far behind. A study by Mastercard found that as much as 55% of Baby Boomers prefer to spend this way too. Even in brick and mortar retail stores, it has become increasingly common to see payments made from a smartwatch or phone. Shoppers prefer the convenience and also the security of virtual cards and wallets. Losing a biometrical-locked digital credit card is not as much of a concern as a plastic one with a magstripe.
For businesses (online and offline), the importance of having the proper infrastructure in place is difficult to understate. A significant portion of the Gen Z and Millennial population no longer carries cash or physical cards on a day-day basis. There are a number of unique solutions available to process various forms of contactless payments.
Companies like Square and Apple are leveraging Near Field Communication (NFC) technology in order to offer more modern payment processors, with an improved checkout experience. NFC is useful for personalizing loyalty programs by sending promotions directly to the consumer’s device, and for the tokenization of payment data. Without diving too deeply into the intricacies of tokenization, it allows for credit card numbers and other sensitive information to be stored in a secure and accessible way. Payment information can be saved for one-click checkouts, subscriptions can be handled without the risk of sensitive data becoming compromised, and hotel check-ins can be significantly expedited. Loyalty program apps use this technology in order to accept payments in-store via QR codes.
“Contactless is the new norm for the payments industry. Increased adoption rate and infrastructure availability shows that there is a high demand for the technology among both businesses and consumers alike. It is important for banks and financial institutions not only to follow this trend, but take the initiative in order to stay relevant for the new generation of users.” – States Santa Kiršbauma, Board Member & Product Offering at DECTA.
It’s worth noting that apps like SoftPos allow retailers to bypassing the more expensive NFC-based infrastructure by converting their smartphones and tablets in to point-of-sale machines. For small business owners and local retail shops, this is often the most convenient and cost-effective method of collecting payments. No matter which particular technology is used, the capability of phones, tablets, and watches to facilitate payments is on the rise.
In Latin America, where contactless payments have been adopted without necessarily having proper security practices in place, fraud rates are up by as much as 35% since the start of the Covid pandemic. Even with the most sophisticated infrastructure, it’s important to be cognizant of the risks. This is a top priority for business owners and consumers alike. According to a Cyber Source study, more that 80% of online retailers rated e-commerce fraud management as extremely important to their business strategy.
According to DECTA’s report on contactless payments, losses in online payments rose significantly in 2021 (up 14% year over-year), Visa stated that payment tokenization alone deters 26% of criminal activity — a promising statistic. Ideally, the combination of contactless payments, advanced infrastructure, and thorough security practices will make transactions safer than ever before.
Governments and large corporations around the world are pushing for the adoption of card tokenization for merchants, consumers, payment aggregators, and more. Apart from the incredible security benefits mentioned above, tokenization is the key to a number of emerging industries. In-car payments are one example, but more ambitious technologies like biometric checkouts and AI enabled “smart terminals” also rely on the widespread implementation of tokenization.
The digitization of personal finance is also causing changes to the way banks and other institutions operate globally. For example, a large portion of modern financial service providers have no physical branch locations, while still offering a phenomenal user experience. This gives them a competitive advantage over more traditional banks.
The technologies upon which contactless payments occur can be applied to purposes far beyond simple retail transactions. Contactless ticketing has seen a sharp increase in popularity, fueled by Covid regulations. NFC-enabled wristbands are used in hotels and resorts to offer convenience to their guests. Their credit card data can be tokenized and linked to their wristband for convenient use at a restaurant or spa. From paid parking to airline boarding passes, personal finance and data are becoming more digital every day. With an emphasis on security, convenience, and responsible innovation, this is an exciting industry with plenty of room left to grow.
A digital wallet is an electronic application that allows users to store and manage their payment information and make transactions using their smartphones or other devices.
Transaction security refers to the measures and protocols in place to protect sensitive financial information during online transactions from fraud and unauthorized access.
Tokenization is the process of replacing sensitive payment information with unique identification symbols or tokens that retain all the essential information about the data without compromising its security.
NFC (Near Field Communication) technology allows devices to communicate wirelessly when they are close together, enabling features like contactless payments and data sharing.
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