At a time in which the U.S. economy was strong and getting stronger, the retail industry was partially focused on reducing friction in retail purchase and improving the customer experience by adopting contactless payment. Industry pundits were speaking of contactless payments and NFC credit-authorization terminals. Contactless payment requires a fraction of the time to consummate from beginning to end than the traditional credit payment and cash transactions.
While the U.S. was still struggling with wholesale adoption of contactless payment, most of Europe and China were surpassing the U.S. in both, the rate of adoption, and in the relative number of NFC terminals deployed. Then came COVID-19.
One could postulate that, had contactless payment been widely adopted and deployed before the COVID-19 pandemic, some contamination via credit cards might have been avoided and maybe even a life or two or three saved.
The national as well as the worldwide experience with COVID-19 is going to accelerate the adoption and deployment of contactless payment and reduce the use of cash as a tender. For some consumers the threat of the pandemic will be an indelible experience, leading them to demand contactless payments. Credit card handling can transmit germs and dollar notes carry more germs than one would want to imagine.
The pandemic will accelerate the deployment and use of contactless payment. Banks will accelerate the deployment of contactless ATMs, as will gasoline station pumps. More traditional retail businesses will accelerate the replacement of credit card authorization terminals to NFC-capable models. It gets better.
In an article published by Digital Transactions, “a Mastercard survey of 1,000 U.S. banked consumers between April 10 and 12 also found that 88% of those who had an opinion said adoption was easy. More telling may be that 56% say they will continue using a contactless payment method when the pandemic ends.
Mastercard, the other card brands, and Silicon Valley tech giants like Apple Inc. and Google, have been promoting contactless payments for years. The tipping point, it appears, may have come with concerns over cleanliness and social distancing driven by the COVID-19 pandemic. Much of the marketing for contactless payments centered on convenience in drive-throughs and in transit. In the first quarter, global contactless payment use increased 40% from a year ago.”
As an example, Micrologic Associates – a New-Jersey-based software development firm for the carwash industry, has developed and will be releasing a mobile application that enables customers to select the type of carwash and add-ons they want, prepay for the transaction, buy for a family member and send the requisite QR Code to that person, identify him/herself upon arrival to the carwash location, and never use a credit or debit card or cash. We spoke to founder and CEO, Miguel Gonzalez, and based on consumers feedback, there was already clear indication that the app created a faster and more convenient transaction leading to an increase of sales. Gonzalez believes the adoption of contactless payments is irreversible and growing significantly.
Some gasoline stations are currently in the process of replacing gasoline pumps with contactless payment capability so that the driver of the automobile only needs a smartphone or contactless credit card to pay for the purchase without attendant involvement.
When we add the capability to email receipts, we are in fact, reducing the use of paper, and reducing the time of the transaction significantly (by between 60-70%).
All the interest notwithstanding, Steve Mott – a veteran Payment Systems consultant and industry pundit – believes contactless payment is “still too tied into the POS infrastructure” Mott adds, “the technology is not too intuitive, especially for older segment of the population” and that “we are still in the early stages of technology.” “The increased use of digital wallets for ecommerce purchases is an indicator of the fact that contactless payment is going to grow. NFC and contactless EMV Cards are good examples of steps in the right direction”, Mott said.
In a recent article on this topic, the publication PaymentSource, states “the data show that over the course of several weeks, coronavirus has done something that payment industry players had failed to do on their own: jolted consumers into changing long-entrenched habits.”