TL;DR: Contactless payments now account for over 60% of Visa's face-to-face transactions in the U.S. — up from less than 1% in 2017. SoftPOS technology is turning smartphones into payment terminals for a $440 million market growing at 16-23% annually. Buy now pay later has reached $560 billion in global transaction volume but costs merchants 4-6% per transaction, roughly double standard card processing. FedNow has grown 459% in transaction volume and connected 1,500 financial institutions, while the pending Visa/Mastercard antitrust settlement could save merchants over $200 billion with a new 1.25% interchange cap. Meanwhile, Amazon shut down its palm-payment system due to limited adoption, AI fraud detection is preventing $25.5 billion in losses annually, and only 7% of retailers have achieved true unified commerce. Here are the trends reshaping how every retail merchant processes payments.
Contactless payments are no longer an emerging trend — they are the default. S&P Global 451 Research reports that Visa's domestic contactless transaction share surpassed 60% of face-to-face transactions as of Q2 FY2025, up from less than 1% in 2017 and 28% in fiscal 2022. Mastercard puts its global contactless share even higher, at more than 75% of transactions on its network in 2025.
The infrastructure has caught up with consumer demand. According to Mordor Intelligence, 87% of U.S. point-of-sale terminals accepted tap-to-pay by 2024, up from 43% in 2020. On the consumer side, 53% of Americans now prefer contactless for in-store payments, rising to 65% among Gen Z, per S&P Global.
The throughput advantage is measurable. Tap-to-pay transactions complete in 1-2 seconds compared to 15-20 seconds for EMV chip insertion. Visa's data shows contactless generates 2 additional transactions and $70 more in monthly spending per debit card user, according to CoinLaw. For high-volume retail locations, that speed translates directly into shorter lines, higher customer satisfaction, and incremental revenue.
| Payment Method | Average Transaction Time | Estimated Transactions/Hour |
|---|---|---|
| Cash | 30-45 seconds | 80-120 |
| EMV Chip Card | 15-20 seconds | 180-240 |
| NFC Contactless (Tap) | 1-2 seconds | 300+ |
Sources: SCORE, TapTouch POS.
For retailers still running chip-only terminals, the math is straightforward: contactless acceptance is expected at checkout, adoption correlates with higher spending, and the hardware upgrade to NFC-capable terminals typically pays for itself through faster throughput. Visa reports that customers are 60% more likely to choose a business that offers tap-to-pay.
SoftPOS — software point of sale — turns any NFC-enabled smartphone or tablet into a payment terminal. No dongle, no reader, no dedicated hardware. A merchant downloads an app, and their phone becomes a contactless card reader. As Don Apgar of Javelin Strategy and Research told PaymentsJournal: "This tech is driving payment acceptance growth like Square did when it first debuted, except without the need for a dongle."
The market is growing fast. Fortune Business Insights puts the global SoftPOS market at $418.8 million in 2025, growing to $1.69 billion by 2034 at a 16.3% CAGR. Grand View Research estimates a higher growth rate at 23.1% CAGR. Both firms agree that micro and small businesses drive the majority of adoption — accounting for 51-63% of the SoftPOS market depending on the methodology.
The cost math is what makes SoftPOS transformative for small retail. Traditional POS terminals cost $300-$800 for hardware, plus setup fees, licensing, and maintenance. SoftPOS eliminates all of that — merchants pay per transaction only, using the phone they already own. Visa's Tap to Phone offering saw 200% year-over-year growth in global adoption, and nearly 30% of Tap-to-Phone sellers are new small businesses accepting cards for the first time.
The major platform players are all in. Apple's Tap to Pay on iPhone is expanding to 25+ new countries in 2026. Stripe Terminal, Square, and Google's Tap to Pay on Android all offer SoftPOS capabilities. JPMorgan Chase and U.S. Bank now offer Tap-to-Phone apps to small business clients as part of their merchant account packages. According to industry projections cited by J.P. Morgan, SoftPOS adoption will grow from 6 million to 34.5 million merchants globally between 2022 and 2027.
Buy now pay later has crossed the line from novelty to mainstream checkout option. According to Chargeflow, global BNPL gross merchandise volume reached $560.1 billion in 2025, up 13.7% year-over-year. The U.S. alone has 91.5 million BNPL users processing $122.3 billion in purchase volume, per Capital One Shopping.
The merchant economics are where it gets complicated. BNPL providers charge merchants 4-6% per transaction on average — and the range extends from 2% to 8% depending on the provider and volume. That is roughly double the 2.5-3.5% cost of standard credit card processing. As EMAC International notes, for a business with 15% profit margins, BNPL at 5% versus credit cards at 3.2% represents a 56% increase in per-transaction cost.
What BNPL buys with that higher fee is larger orders. Mondu reports that businesses typically see average order value increases of 15% to 40% after implementing BNPL. The tradeoff is real: higher AOV at a higher processing cost. For retailers selling higher-ticket items where the AOV lift justifies the fee premium, BNPL makes financial sense. For low-margin, low-ticket retailers, the economics are harder to justify.
| Provider | Model | Key Stat |
|---|---|---|
| Klarna | Pay in 4, Pay in 30, Financing | $3.5B FY2025 revenue |
| Affirm | 0-36% APR, no late fees | $3.22B FY2025 revenue |
| Afterpay (Block) | Pay in 4, no interest | Integrated with Square ecosystem |
| PayPal Pay Later | Pay in 4, monthly plans | Embedded in PayPal checkout |
Sources: Chargeflow, GlobeNewswire.
In-store BNPL adoption remains surprisingly low — less than 0.5% of total checkouts at physical stores as of 2025, according to Sensepass. BNPL is overwhelmingly an e-commerce phenomenon. And on the regulatory front, the CFPB rescinded its 2024 interpretive rule that would have classified BNPL products as credit cards subject to Truth in Lending Act disclosures, per Consumer Finance Monitor. For now, BNPL providers face a lighter federal regulatory burden.
The Federal Reserve's FedNow Service, launched in July 2023 with 35 financial institutions, has grown to approximately 1,500 participants across all 50 states. Federal Reserve data shows the service processed 8.4 million payments totaling $853.4 billion in 2025 — a 459% increase in transaction volume from 2024. The maximum transaction limit has increased from $25,000 at launch to $10 million as of November 2025.
The Clearing House's RTP network, launched in 2017, is further along. RTP processed 128 million transactions totaling $480 billion in Q1 2026 alone, connecting 950+ financial institutions, according to The Clearing House. According to Dwolla, over 40% of companies exceeding $100 million in revenue already use RTP for instant transactions, and nearly 70% of businesses anticipate adopting instant payments within two years.
| Year | FedNow Payments | Total Value | Growth |
|---|---|---|---|
| 2023 | 47,262 | $18.4M | Launch year |
| 2024 | 1,505,250 | $38.2B | — |
| 2025 | 8,413,402 | $853.4B | +459% volume |
Source: Federal Reserve Services.
For retail merchants, the most relevant near-term use cases are instant refunds (eliminating the 3-5 day ACH wait that frustrates customers), same-day supplier payments (enabling better vendor relationships and early-pay discounts), and immediate payroll for hourly and gig workers. Consumer-to-merchant instant payments at the point of sale are further out — Bank of America and Citigroup still have not connected to FedNow as of early 2026. But the trajectory is clear: real-time settlement is coming, and it will fundamentally change when merchants receive their funds.
The 2026 Manhattan Associates Unified Commerce Benchmark delivers a striking finding: only 7% of retailers have achieved true unified commerce, while 33% are still classified as "Basic." Yet the leaders achieve nearly 2x higher growth rates than their basic-tier peers — the payoff for getting it right is enormous.
Unified commerce means a single view of inventory, orders, customers, and payments across every channel — online, in-store, mobile, marketplace, and social. It is the infrastructure that makes seamless cross-channel experiences possible: buy online and pick up in-store, start a return online for an in-store purchase, apply loyalty points from a mobile app to a register transaction, or order an out-of-stock item from the store floor for home delivery.
The stakes are rising because consumer behavior demands it. According to Manhattan Associates, more than 66% of consumers use two or more channels before completing a purchase. Capital One Shopping reports that omnichannel customers spend an average of 16% more per order than single-channel shoppers. And 73% of retail purchases involve a physical location in some way — whether for pickup, return, or browsing before buying online.
The BOPIS (Buy Online, Pick Up In-Store) market alone illustrates the scale. BusinessWire puts the U.S. BOPIS market at $129.36 billion in 2024, projected to reach $509.4 billion by 2033. Click-and-collect (BOPIS plus curbside) is forecast to account for 11% of U.S. e-commerce in 2026, per Capital One Shopping. Each BOPIS transaction creates a complex payment flow — card-not-present rates apply at time of online order, but the fulfillment is in-store, and 14% of BOPIS shoppers add impulse items at pickup.
Capabilities that differentiated leaders just two years ago — real-time inventory visibility, digital wallet acceptance, and cross-channel support — are now table stakes, with 38% of those capabilities reclassified from "differentiator" to "baseline" between 2024 and 2026. The bar is rising every year.
AI in retail payments has moved past the pilot phase into measurable, large-scale impact. According to Articsledge, AI fraud detection systems prevented an estimated $25.5 billion in global fraud losses in 2025 — achieving 90-98% accuracy rates across major retail institutions while reducing false positives by 60% compared to rule-based systems.
Mastercard's generative AI deployment is a concrete example. The company reported that its gen AI implementation doubled detection rates of compromised cards and reduced false declines by up to 200%. Banks across the network report 60% reductions in false positives after AI deployment. For merchants, fewer false declines mean more legitimate transactions go through — directly improving revenue.
Beyond fraud detection, AI is driving measurable results in retail loss prevention. Appriss Retail's 2026 benchmark found AI loss prevention tools driving nearly 29% reductions in total retail loss — saving up to $86 billion. AI return fraud systems specifically produced a 12% drop in in-store returns and a 6.5% decrease in online returns.
The next frontier is agentic commerce — AI agents managing purchases on behalf of consumers. Mastercard predicts this could unlock up to $1 trillion in U.S. B2C retail revenue by 2030 and $3-5 trillion worldwide. Already, AI-driven retail traffic has increased 4,700% in one year, driven by AI shopping agents and algorithmic recommendations, per Total Retail. This shift will require payment systems designed to authenticate and authorize transactions initiated by software agents, not just human shoppers.
In January 2026, Amazon announced the shutdown of Amazon One — its palm-scanning payment system deployed at Amazon Go stores, Whole Foods, and partner retailers like Panera Bread. All palm readers will be removed by June 3, 2026. The reason, per Payments Dive: "In response to limited customer adoption." At the time of the announcement, Amazon One was still processing over 1 million biometric authentications per month on 9,900+ devices — but even that volume was not commercially viable enough to continue.
This is the most significant signal in the biometric payments space in 2026. The market for biometric in-store payments is valued at $9.7 billion in 2025 and projected to reach $87.1 billion by 2035, according to Market.us. But Amazon — the company with the most resources, infrastructure, and willingness to invest long-term in retail technology — concluded that dedicated biometric terminals do not have sufficient consumer appetite.
The reality is more nuanced than "biometrics failed." Biometric authentication is thriving — just not in the form of dedicated palm or face scanners at checkout. It is succeeding when embedded in devices people already carry. Apple Pay's Face ID and Touch ID, Google Pay's fingerprint unlock, and banking app biometric authentication all use biometric verification through the consumer's own device. According to Market.us, 84% of global consumers had used at least one form of biometric authentication for transactions by early 2026. Fingerprint recognition accounts for 45.9% of all biometric payment authentication.
The lesson for retailers: biometric payment authentication works when the consumer controls the biometric data on their own device. Asking consumers to scan their palm or face on a merchant-controlled terminal is a different proposition — one that even Amazon could not make work at scale.
The most consequential development in retail payment processing fees in over a decade is pending final court approval. On November 10, 2025, Visa and Mastercard announced a revised settlement in the antitrust case that has been in litigation since 2005, according to Reuters.
The settlement terms are significant. Standard consumer credit card interchange rates would be capped at 1.25% for 8 years — more than a 25% reduction from current averages. A temporary additional reduction of 0.10 percentage points would apply for 5 years. Merchants would gain the right to surcharge credit card transactions up to 3% regardless of whether they also accept American Express. And merchants could decline high-cost premium and commercial cards under a relaxation of the "Honor All Cards" rule. Merchant attorneys estimate the settlement would save well over $200 billion over its lifetime, affecting 12+ million U.S. merchants.
Not everyone is celebrating. Major merchant groups including the NRF and NACS are opposing the settlement, calling it "flawed" for not addressing the underlying structure of interchange pricing or capping network assessment fees, per MCAG. Final court approval is expected in late 2026 or early 2027.
Independent of the settlement, processing fees continue to evolve. Mastercard introduced a new Force Post Transaction Fee of $0.09 per transaction effective April 1, 2026, according to Wind River Payments. And 40% of retail businesses now use cash discount programs — offering a discount to non-card customers — as a way to offset processing costs. According to Federal Reserve data, these programs have not meaningfully shifted consumer behavior: 73% of credit card-preferring consumers continue using their preferred payment method even when a cash discount is available, except for transactions exceeding $1,000.
Visa reported that contactless payments surpassed 60% of its domestic face-to-face transactions as of Q2 FY2025. Mastercard puts its global contactless share at over 75%. In the U.S. specifically, 87% of point-of-sale terminals now accept tap-to-pay (up from 43% in 2020), and 53% of consumers prefer contactless for in-store payments. The preference is generational — 65% of Gen Z prefers tap, and 90% of Gen Z and Millennials have used contactless at least once in the past month.
Merchant fees for buy now pay later typically range from 4-6% per transaction, with the full range extending from 2% to 8% depending on the provider and volume. That compares to 2.5-3.5% for standard credit card processing. BNPL fees are roughly 60-100% higher than card processing, but the tradeoff is a 15-40% increase in average order value. In-store BNPL adoption remains minimal — less than 0.5% of physical store checkouts — so the cost primarily affects e-commerce merchants.
A revised settlement was announced November 10, 2025. If approved, it would cap standard consumer credit card interchange at 1.25% for 8 years (more than 25% below current rates), allow surcharging up to 3%, and let merchants decline high-cost premium cards. Estimated savings exceed $200 billion for 12+ million U.S. merchants. Final court approval is expected in late 2026 or early 2027. Major merchant groups including the NRF are opposing it for not fixing the underlying pricing structure.
Yes. SoftPOS technology turns any NFC-enabled iPhone or Android device into a contactless card reader. Apple's Tap to Pay on iPhone and Google's Tap to Pay on Android are both available, along with integrations from Stripe Terminal, Square, JPMorgan Chase, and U.S. Bank. No additional hardware is required. The SoftPOS market is approximately $420-$440 million and growing at 16-23% annually. For small businesses, it eliminates the $300-$800 cost of traditional terminal hardware.
FedNow connects approximately 1,500 financial institutions and processed $853.4 billion in 2025, with a 459% year-over-year growth in transaction volume. But for retail point-of-sale payments, it is still early. Bank of America and Citigroup have not yet connected, and consumer-to-merchant instant payments at checkout are not widely deployed. The most relevant near-term retail use cases are instant refunds (eliminating the 3-5 day wait), same-day supplier payments, and immediate payroll for hourly workers. Widespread retail POS adoption is likely 2-3 years out.