Contactless payment enables shoppers to pay for items and services using credit and debit cards, smart cards, key fobs, or other devices, such as smartphones and other mobile devices that use RFID technology without swiping, entering a PIN, or signing for a payment.
Perhaps its contact-free nature deemed it the perfect payment option amid a global virus that needed social distancing and minimal contact with public-shared equipment like a card terminal.
An August teamwork study by the National Retail Federation and Forrester found a notable increase in contactless payment methods. 1 in 5 customers said they had made their first contactless payment amid Coronavirus. In the same poll, 58% of retailers said they already accept contactless cards, a rise from 40 percent in 2019, and 94 percent of these are optimistic usage will increase.
Another study by Entrust Datacard found that 40 percent of shoppers make a contactless payment method at least thrice a week and 34 percent no less than one or two times a week. In other findings, the same researcher noted sanitary concerns as the top customer concern driving contactless usage, as expressed by 70 percent, to beat the 67 percent who cited payment speed.
It’s okay to celebrate success, but being a two-faced payment option that needs both merchant and customer readiness, mass adoption may not happen as quickly as advocates anticipate.
Why Could Slow Contactless Adoption
So what could slow the transition to contactless payments?
The first setback for contactless is the sudden change in consumer habits. In general, in-store shopping has reduced significantly, but perhaps more notable are the changes in consumer buying habits.
According to McKinsey and Co’s June study, 75 percent of buyers have tried a new shopping option amidst the pandemic. Almost ⅓ now use grocery delivery more often for the first time, while ¼ admitted to using curbside pickups more often for the first time. Mckinsey and Co. obtained the results from an interview that featured over 2,000 US consumers.
A contactless payment option is less helpful if shoppers are no longer used to shopping in a physical store.
Buyers are now accustomed to having items like grocery delivered to their homes and may likely shop less in-store even post-pandemic
A second factor is a convenience at the point of payment. By 2019, less than half of retailers included contactless payments at checkout; COVID pushed the numbers to 68 percent. Still, consumers will take more and more time to adopt contactless due to convenience issues.
A shopper will likely shy at the idea of attempting a tap-and-pay at a POS terminal that doesn’t accept contactless payments and would rather insert it than try waving it around helplessly.
Contactless is well-placed to perform better, but payment providers and merchants must understand and address its challenges to make it a mainstream method post-corona.
Payment industry guru Taylor Cole is a passionate payments expert at bestpaymentproviders.co.uk who understands the complex world of high risk merchant accounts. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie with ice-cream on his backyard porch, as should all right-thinking people.