Is COVID-19 the Tipping Point for Contactless Payments Adoption?
Contactless payments have been experiencing a steep rise outside of the U.S., particularly as a result of the COVID-19 outbreak. In the U.K., where almost 50 percent of payments are contactless, the spending limit for contactless payments was increased in April from £30 to £45 so that even more transactions could be paid via this method to avoid the danger of infection. In the U.S. merchants are also removing the prompt for requiring signature during the pandemic, which is in-line with changes released by Visa in 2018 to no longer capture and validate signatures for compliant EMV devices.
Will it take something like COVID-19, and the concern for hygienic payment processes, to finally drive contactless payments adoption domestically? Could this be the push consumers needed to change their payment behaviors, and, as a result, increase contactless payment options offered by retailers?
A March study from the Electronic Transactions Association and The Strawhecker Group found that for those businesses still accepting payments on-site, 27 percent noted an increase in contactless payments made through smartphones and contactless cards. The survey also found that customers are conducting more mobile purchases.
Shifting behaviors like these demonstrate that consumers are more hesitant to pay by traditional methods like inserting their credit card into a terminal shared with other shoppers or exchanging cash with cashiers at the point of sale (POS). And once the pandemic is over, these consumers may welcome the more convenient method of contactless payments.
It’s been found that an EMV payment with signature takes just under 40 seconds, a normal card payment with PIN can be 29 seconds, and a cash payment takes a total of 22 seconds. However, when you only have to hold your mobile phone (Apple Pay/Google Pay) or card up to the POS terminal without entering a PIN, customers can clear the cash register in 11 seconds. Biometric authentication on a mobile phone therefore has its appeal for both retailers and consumers.
Incentives like loyalty card programs or digital loyalty coupons are beneficial in driving further adoption of contactless payments. Furthermore, many customers are increasingly managing these benefits conveniently and centrally on their smartphones, making this a natural fit. The new generation of POS terminals provides the ability to use payment applications like PayPal as well as loyalty apps and additional checkout apps in one device — making these a good fit for retailers that want to meet consumers’ desires for contactless and mobile payment options now and in the future.
So, will this all drive an increase in contactless payments adoption and usage in the U.S.? With consumers’ changing purchasing behaviors in the wake of COVID-19, concerns about the hygienic aspects of paying with cash or credit cards, and overall desire for convenience and expediency, all signs point to “yes” at this time.
Now would be a good time for retailers to re-evaluate their customer payment options to ensure they have the contactless and mobile payment methods desired to be able to meet their current needs — and future requirements.
Jed Danbury is a vice president at Computop, a global payment service provider. He has been working in the banking and merchant processing industry for more than 15 years.