The COVID-19 pandemic has ushered in a wave of new-normal behavior, from mask-wearing to social distancing. In a shift likely to have a long-lasting impact, contactless payments are gaining traction as consumers get comfortable with the technology, drawn in by its safety and sanitary advantages.
Contactless payments include digital wallets such as Apple Pay and Google Pay, along with cards enabled with RFID or near-field communication (NFC) technology supporting “tap” style payments.
The technologies, widely popular in Europe and across Asia, have been slower to catch on in the United States — that is, until now. A study published in 2018 by consultancy A.T. Kearney found that an estimated 3% of cards used in the United States were contactless, compared to roughly 64% in the U.K. and as high as 96% in South Korea.
Fast forward to Spring 2020, and the global pandemic has helped shift adoption of contactless payment into high gear. According to a recent Mastercard global consumer study, nearly eight in 10 respondents say they are now using some form of contactless payment. Between February and March — as COVID-19 was heating up — contactless transactions grew twice as much as non-contactless transactions, particularly for items in the grocery and drug store categories, the Mastercard research found.
A similar survey by Visa revealed that 31 million Americans tapped a Visa contactless card or digital wallet in March, up from 25 million last November. In the United States alone, Visa said overall usage of contactless payments has surged 150% in the last year.
The momentum behind contactless payment shows no sign of abating. Experts predict that a new cultural standard has been set and urge companies, from retailers to banks, to embrace the movement and greenlight contactless payment strategies as part of their current roadmaps.
Driving Business While Encouraging Safety
Increased adoption of contactless payments will not only help flatten the COVID curve — it is central to fueling future economic growth. As cities and states begin the gradual process of opening up after months of shutdowns and stay-at-home orders, many consumers remain wary about virus exposure. Fears about touching cash and having direct contact with people as part of the payment process could hold consumers back from full economic participation.
Contactless payment can alleviate many of those concerns. In fact, most respondents (82%) to the Mastercard survey see contactless as a cleaner way to pay, while others said the method was up to 10 times faster than in-person payment options. Thanks to these and other upsides, 52% of those under 35 years old have traded up their former top-of-wallet card for a contactless payment option, according to the Mastercard data.
Scaling access to contactless payment options is one way retailers, restaurants and other merchants can increase the likelihood that customers will feel safe entering physical locations to conduct transactions. With confidence in contactless on the rise, it’s pretty clear the technology is here for the long run. Nearly three-quarters of respondents to the Mastercard survey (74%) confirmed they plan to continue use of contactless technologies long after the pandemic is over.
Meeting Consumer Demand for Contactless Payments
To meet the rising demand, companies need to step up their contactless payment game. To start with, it’s important for retailers to begin training employees on how to use the new payment technologies as well as how to encourage consumers in stores to adopt this new, safer payment method.
Financial institutions like banks also need to do their part by promoting contactless technology initially to high-priority cardholders (typically the under-35 set), and eventually to their broad base of clients. They need to educate cardholders on the security mechanisms surrounding the technology as it’s often a sticky point, and expedite their plans to make them available to customers. Already, many are getting the message. Publix recently rolled out contactless payment to all its stores, as did arts and crafts retailer Michael’s.
At the same time, retailers and businesses need to ensure their contactless payment options can scale to meet growing customer demand. The notion of a gradual roll-out or partial adoption is giving way to the need for full-scale implementation — and there is a lot to consider to ensure a seamless experience for customers.
Given the complexity of adding contactless payments, ask yourself the following questions before fully rolling it out to your customers:
- Are there any issues accepting and processing payments through a contactless method?
- Can customers successfully get refunds and/or credits for their purchased product?
- Can customers in new markets successfully buy my product using contactless payments used in that market?
- Are earned rewards (points/credits) being calculated properly for contactless purchases?
- Can you verify that POS terminals at your top merchants can accept contactless payments?
Organizations need to put the proper quality assurance testing platforms and strategies in place. Organizations should look for testing platforms that support a range of devices, can test with real payment instruments and active accounts, and that support contactless across numerous touchpoints for a true omnichannel payment experience.
Making contactless payment options readily available to customers doesn’t matter much if the process is overly complex, or if the technology doesn’t work as promised. It’s important to embrace scalable quality assurance in order to ensure contactless becomes a successful part of any payment roadmap.
Click here to learn more about how Applause tests contactless payments for leaders in the financial industry.