Mark Smith, head of payments for financial services, Amazon Web Services, discusses how the pandemic has prompted many financial institutions to fast-track their digital initiatives to offer streamlined, end-to-end, real-time omnichannel experiences, including contactless payments. “I expect that this customer-centric drive toward contactless will continue to inform new waves of innovation in payments and personal finance post-pandemic,” he says. Read more in “The Way Payments Are Now Done,” as 33 payment executives discuss what payments’ “new normal” looks like.
COVID-19 caused a shift in the way banks and payments providers engage with customers as the number of cash transactions and in-person visits to branches diminished. As a result, many financial institutions (FIs) accelerated their digital transformation journey to provide streamlined, end-to-end omnichannel experiences that include contactless payments — one-touch or cashierless options — delivered in real time. I expect that this customer-centric drive toward contactless will continue to inform new waves of innovation in payments and personal finance post-pandemic.
Contactless payments include a wide range of applications, from tap-to-pay debit and credit cards to mobile wallets installed on a customer’s smartphone to payment solutions that send texts to a customer to complete the purchase without needing a mobile wallet. A recent global Mastercard survey indicates that 74% of customers (consumers) said they will continue to use contactless payments in the future. For consumers, flexible, convenient, touchless transactions are no longer a perk — they are a necessity.
Financial institutions are increasingly using AWS to harness vast amounts of previously siloed data to develop a better understanding of customer preferences, provide a holistic customer view to enhance service, and offer new and relevant products and services, such as contactless payments. These firms understand that decisions must be made quickly and accurately, using historical and real-time data combined with cutting-edge tools like behavioral biometrics, artificial intelligence (AI) and machine learning (ML) to prevent fraud on transactions and ensure customer trust. For example, last year, Venmo, a rapidly growing peer-to-peer (P2P) payments app with over 60 million+ active users, rapidly evolved to quickly respond to market demand for a contactless solution among both businesses and consumers. Venmo used AWS services to build and roll out new contactless products in as little as six weeks.
“We were able to develop and release a solution that enabled Venmo customers to present and share a way to receive contactless payments and to pay at QR code-accepting merchants, and went from literally zero lines of codes to beta in six weeks,” said Nick Ciubotariu, Venmo CTO, at his AWS Reinvent 2020 session.
Another customer, BBVA, the global financial services group, wanted to enable contactless payments via near-field communication (NFC) in its mobile banking app, made by placing a mobile phone near a payment terminal. However, the solution needed to comply with all international and country-specific standards for its products — and mobile contactless payments are subject to particularly strict rules. BBVA knew that developing a new, internationally compliant solution could be expensive and complex since it operates in 35 countries. Using AWS, BBVA was able to build and implement a PCI DSS-compliant solution and reduced costs by 80% with on-demand scaling.
As demand rises for contactless payments – driven by exogenous factors like COVID-19 or interest in new form factors like wearables – payment companies and banks that build applications and platforms in the cloud, like Venmo and BBVA, will have an advantage. They will be able to identify changes in customer preferences and quickly and securely build, test and launch new and innovative ways to pay.