COVID-19 boosts contactless payments; is it here to stay?

30

September

2021

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Not only has the shopping process itself changed during the pandemic, but also the way of payment. Contactless payments have been on the rise for a few years, but since the outbreak of COVID-19 contactless payments have grown twice as fast as non-contactless payments. As the Executive VP of Mastercard states; ‘Social distancing does not just concern people’s interations with each other; it includes contact with publicly shared devices like point of sale terminals and checkout counters’. The two most important drivers for this change are safety and cleanliness, which are clearly even more important than ever. During the first quarter of 2020, during the outbreak of COVID-19, Mastercard reported a 40% growth in contactless payments, because of the fear of transferring COVID-19 through cash or touching devices. Also three quarters of consumers make at least one contactless payment a week during the pandemic and the prediction is that this will not change even after the pandemic is over, with 74% of the respondents saying that they will keep using contactless payments.

Clearly most people now know how contactless payment works, but what technologies are behind this innovation? These technologies are radio frequency identification (RFID) and near-field communication (NFC), which use transponders and radio waves to enable communication between devices and systems. The RFID technology is used between a powered reader and an unpowered tag, while the NFC technology is used between two powered devices, for instance when a payment is done by holding your smartphone against a payment terminal. Currently Google Pay, Apple Pay and Samsung Pay are big players in the contactless payment industry.

A few benefits of contactless payment, such as safety and cleanliness, have already shortly been discussed, however these are not the only benefits. Convenience is also one of the key factors driving the growth of contactless payment as it speeds up the checkout process, which is an advantage for both the customer as the business. Also less mistakes are made, as contactless payment is mostly an automated process, so it is less likelly for human errors to be made. Governements of various countries have recognised these benefits and raised the limit for contactless payment since COVID-19 which boosted growth even more.

Sources:
https://www.mastercard.com/news/press/press-releases/2020/april/mastercard-study-shows-consumers-globally-make-the-move-to-contactless-payments-for-everyday-purchases-seeking-touch-free-payment-experiences/
https://www.forbes.com/sites/forbestechcouncil/2020/10/21/contactless-payment-solutions-why-and-how-to-adopt-them-in-a-post-covid-19-economy/?sh=32b3f3b24fbf

Accelerated Trends: Contactless Payments & COVID-19


https://www.cnbc.com/2020/04/29/mastercard-sees-40percent-jump-in-contactless-payments-due-to-coronavirus.html

How contactless payments are driving digital payment services in times of COVID-19

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XaaS: Transforming business models

25

September

2021

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Software-as-a-service (SaaS), Platform-as-a-service and Infrastructure-as-a-service are already well-known business models. However as more companies are welcoming digital transformation a new business model has arisen called everything as a service (XaaS), which has the goal of transforming a business from product-based to service-based through subscription models. XaaS is not only suitable for certain kind companies, but for any company in any industry who wants to shift to a service- based business model. In the age of digital transformation the customer demand for as-a-service models has rapidly increased. Service based business models are more focused on delivering value to the consumer and prove to be more profitable by opening up new revenue models, which is why many business leaders are recently making this shift. Research has showed that companies that have made the switch to XaaS are growing five times as fast as their competitors and have 7% higher returns for their shareholders.

When implementing a XaaS model there are multiple types to choose with different revenue models. The first one is an unlimited subscription, which is a subscription that offers an unlimited quantity of the service you offer for a certain period of time. Instead of an unlimited quantity, you also have a predefined subscription, which offers a certain amount of services for a period of time. Another version of a predefined subscription, is a subscription plus overages which is a predefined subscription but with extra’s that will be billed when used. Another well-known business model is Freemium, which gives customers free access to basic services, but charges when customers choose to use the premium version with more extensive features. Spotify is one of the companies that uses this model as they offer a basic and ad-supported service. When purchasing the premium version, the ads dissappear and there is also a possibility to download songs. The last two business models are consumption-based, which entails charging customers on a pay-per-use basis, and outcome-based, which entails charging customers based on the value you deliver.

When implementing XaaS into your business, it is important to realize that it involves a shift in your entire business. Therefore a clear strategy is essential to make the business succeed in this increasingly digitalizing and competitive business world.

Sources:
https://www.pwc.com/us/en/services/alliances/sap-implementation/xaas-business-model-transformation.html
https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2019/05/29/what-to-know-before-transitioning-to-an-xaas-business-model/?sh=ba0f1566f875
https://www.informationweek.com/cloud/8-tips-for-growth-in-an-xaas-business-model
https://www2.deloitte.com/us/en/insights/focus/industry-4-0/anything-as-a-service-xaas-solutions-transformation.html
https://www.tsia.com/xaas-speaking-engagements
https://www.cio.com/article/3308418/what-is-xaas-a-way-to-inject-agility-into-your-digital-business.html
https://www.strategyzer.com/business-model-examples/spotify-business-model

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