Understanding the Contactless Revolution

Stand in the payment queue at any shop in 2023, and many of the transactions taking place will likely be contactless. Indeed, according to industry research, nearly 60% of in-store shoppers paid using a contactless card last year – an increase of 94% compared to the 12 months before.

Among the various drivers of this important trend are the environmental, social, and governance (ESG) policies pursued across the financial services industry. These include efforts to significantly reduce the use of plastic cards across the payment ecosystem – a move which could eventually see mobile contactless apps become the primary payment method.

Considering the ESG standpoint, it becomes evident why the issue holds significance. Approximately 6 billion plastic payment cards are produced annually, with 2.8 billion being credit cards utilised worldwide. These credit cards amount to a staggering 140 million kilograms of plastic, which poses a considerable environmental burden. In light of organisations’ widespread efforts to minimise plastic consumption, this situation is unsustainable, particularly when technological innovations are readily accessible.

Moving Towards Net Zero

Part of the problem with the disposal and recycling of plastic cards is that there are no regulations to manage them when they expire or need to be replaced. For most people, disposal has generally involved cutting them into pieces and throwing them in the bin. This approach circumvents recycling options altogether, but is one that is perhaps understandable given the apparent security concerns. As a result, this waste plastic will generally end up in landfill.

So, what are the prospects for further growth in using contactless payment systems, and where might the industry be heading in the coming years? Firstly, it’s worth noting that the financial services industry has a strong track record of embracing tech-led innovation. As far back as the 1950s, the industry drove the adoption of credit cards in a move which, at the time, brought huge levels of payment convenience. Today, innovation continues to drive positive change, with the digital payments system transforming the speed and convenience of everyday transactions.

However, what needs to come next is for more organisations across the sector to set out their plans to reach net zero. This is no easy challenge, particularly for today’s large and complex businesses that operate across national boundaries to deliver a 24/7/365 business model. Where relevant, minimising or even eliminating the use of plastic can provide significant progress, particularly given the vast number of cards in circulation.

Using contactless payment and mobile e-wallets allow people to stop using plastic cards completely. Whether transactions are completed via a phone app or even a watch, these systems saw significant growth during the Covid-19 pandemic, where many people were reluctant to use physical cash, especially when an effective alternative was readily available. Building on this growth trend will continue to take more plastic cards out of circulation, especially if financial services and app developers can continue to improve accessibility options for people who remain reluctant to switch from physical cards or cash.

Whilst the shift to digital payments brings new risks to security, it has in fact brought significant improvements compared to traditional plastic cards. By leveraging encryption features, authentication protocols, and real-time monitoring of payments, digital payment methods offer significant protection against fraud. These advanced security measures help organisations stay ahead of evolving threats and can provide users with greater confidence in the security of their financial transactions.

Bridging the Digital Divide

However, while the shift towards a digital, contactless payment system offers a wide range of benefits, it also brings some challenges that must be taken into account. One of the most significant is the digital divide between consumers with full and easy access to smartphones, reliable internet, and the technological know-how required to use them, and those without. This issue can disproportionately impact older generations in particular and creates the risk of financial exclusion – a situation that must be avoided.

To address these challenges, there is an ongoing need for more effective educational initiatives from both the industry and government. These initiatives should focus on breaking down barriers and empowering consumers to feel confident transitioning to digital payment systems. Through comprehensive training and support, organisations and government entities can bridge the digital divide, ensuring that everyone can move towards a digital payment future.

There’s no doubt, then, that the expiry date for the use of plastic cards in the payment process is fast approaching – the question for the industry is how soon they can be removed from the environmental burden it creates for the benefit of everyone.

Pavlo Khropatyy VP, Global Head of Delivery FS&I Intellias

Colin Bryce Managing Director of Cobry, a Glasgow-based digital transformation company and Google Cloud partner

From being the preserve of actuaries and statisticians a generation ago, suddenly we have all become big data handlers.

Even the smallest of businesses and organisations are now expected to handle and organise flows of information from multiple channels every day and, for many, it can feel overwhelming.

The reality is that it’s only going to intensify. By 2025, it is estimated that we will be generating 175 zettabytes – or 175 trillion gigabytes – of data globally every year.

Since one gigabyte is equal to one thousand million (109) bytes, 175 trillion gigabytes is expressed as 175,000,000,000,000,000,000,000 or 17.521 bytes, representing a fivefold increase in data generation since 2018, and 180 times more than was generated 20 years ago.

To put that figure into some kind of perspective, the Apollo 11 moon landing was achieved using around 4,000 bytes of computing power. A modern smartphone typically uses four gigabytes of randomaccess memory (RAM).

Big-data technology is transforming almost every industry by creating actionable information and, because of its effectiveness in helping to generate new business, even small companies, usually slow to adopt new technologies, are coming on board, helping them to leverage up 15% more sales, according to a recent study.

An increasing amount of data is already generated by artificial intelligence (AI), to map the performance and output of the growing number of digital things in our lives.

As 5G communications become more widely adopted, these will soon include driverless transport, Internet of Things (IoT) devices including sensors in our bodies, homes, factories, and cities, as well as high-resolution content for 360 video and augmented reality.

Companies and organisations that are early adopters of big data analysis tools are more likely to benefit from reduced costs – including by optimising pricing strategies –increased operational efficiency and an improved ability to identify weaknesses and failures in their operations.

They will also be better able to design new products and services, conduct 360-degree customer reviews and identify and prevent fraud.

As a provider of Google management tools and services, the main bread and butter of our business has, until now, been platforms that help our clients handle documents, email files, video calls and other communication tools.

We estimate that, within two years the bulk of our work will be helping those same businesses to cope with the enormous flood of data they can expect to receive.

All companies have data; most have a lot of data and quite often the way it is organised is chaotic or not fully thought through. There’s not much governance and thought currently give to how that data is collected and organised and shared.

Our first step with new clients is to help them collect data in a consistent way – which means it’s easier to make sense of – and then to feed it through into what are called data lakes. We effectively pipe all of their data, from different sources, into one place, so that it can be more easily interrogated.

Depending on the business, data can come from a range of different sources. Here are just some of the different types of intelligence that is routinely gleaned about its customers.

• Personal data: Includes information such as their gender, occupation, age, and social class as well as non-personal material such as their IP address, web browser cookies and IDs of devices including laptops and mobile phones.

• Engagement data: This helps businesses to understand how their customers interact with their website, mobile phone apps, text messages, social media pages, emails, paid ads, and other customer service routes.

• Behavioural data: Provides companies with transactional details, including purchase histories, product usage information, such as repeat custom as well as qualitative data, such as mouse movement information.

• Attitudinal data: Encompasses metrics on items such as consumer satisfaction, buying criteria, product desirability and more.

Giving all that data structure and coherence helps businesses to better understand what it means, to visualise it and to create dashboards, charts and graphs so that non-experts are able to see and understand what is happening with their customers.

Providing them with live intelligence and insights into customers habits and behaviour, means they can make better informed, data-driven decisions in a useful way, rather than flying blind.

Some businesses that have yet to perform any data analyses often worry that they don’t have enough information to analyse. Most have more information than they can handle and, as the business grows, big-data systems become more relevant.

Few business owners can expect to gain any meaningful insight by reviewing data manually; they need the right tools and methods provided for them and explained by a specialist.

If they don’t have the budget for a full-time analyst, hiring a consultant who can point them in the right direction is a useful alternative. As well as creating statistical summaries of their data analyses, an expert will also help them to understand what’s causing the patterns in their data. Business owners and senior managers will also need to know what may happen in the future and technologies such as predictive and prescriptive analytics can help them to achieve that.

Using real-time analytics can provide them with critical insights, in real time, on an executive dashboard. Dashboards permit them to access information, ondemand, via a smartphone, laptop, or other connected device and to share the information with colleagues.

Most businesses have spreadsheets, databases and customer-relationship management tools that are full of valuable information and can be used in combination with commercially available data sets and easy-to-use, Google data management tools.

After they have analysed their data, they will need to have it presented in a way that non-technical staff members can comprehend and use to make informed decisions. Again, Google has a range of data visualisation tools that will work with their current technologies.

It’s generally accepted that Big Query is the best tool for gathering data and they also have arguably the best data visualisation tool in Looker. It’s more than a visualisation tool, it also takes care of governance and sharing of data.

Everyone has their strengths in different parts of the cloud but I think everyone would accept that Google has the lead in data.

Change management is something that we have long standing expertise in and we have noticed that the techniques we have developed over a decade in helping people move to Google Workspace translate perfectly in helping them, to make sense of their data challenges, such as communicating with them, giving them a clear picture of what the pathway is going to be, training people and upskilling them and improving their knowledge.

As we all strive to become big data handlers, it’s comforting to know that there are tools available to help lighten the load.