All around the world, people are turning to digital technologies and services in response to the COVID-19 pandemic. Online shopping, virtual meetings, and even digital banking are all on the rise as people continue to embrace social distancing recommendations and remain operating in a work-from-home environment.
More than reducing the amount of cash that people carry with them or use, there’s a relatively new payment method that’s become even more popular during the pandemic: contactless payments.
So how are consumers embracing contactless payments during COVID-19, and how are business owners adapting to the technology? To find out, we surveyed over 1,000 people (including both consumers and small business owners) for their preferences on tapping to pay rather than sliding, swiping, or inserting. Read on as we explore how many people are exclusively using contactless payments in 2020 (and why), what consumers’ modern payment preferences are, and how much pressure businesses are feeling to adopt contactless technology.
The technology behind contactless payments means that you no longer need your physical debit or credit cards to pay with them. A combination of near-field communication (NFC) and RFID technology means that your phone, smartwatch, key fob, or even a simple sticker can be programmed for contactless payments. Contactless payments usually mean that you don’t physically have to touch the credit card terminal or point of sale system when you’re checking out somewhere, either.
Since the COVID-19 pandemic began, the number of respondents always using contactless payment has nearly doubled. Before COVID-19, we found that 34% of consumers often used contactless payments when checking out, and 16% always used the technology. In contrast, 41% of consumers reported often using contactless payments during the pandemic, and 32% said they always use contactless payments. Overwhelmingly, the fear of COVID-19 (67%) was the biggest reason for the shift to contactless payments, followed by convenience (57%) and that some stores are requiring it (47%).
Many small business owners are also making the switch to contactless payments for their firms, including 67% of Generation Z business owners, and 57% of millennials. Forty-four percent of business owners offer contactless payment in addition to conventional payment methods, while 27% reported switching and exclusively accepting contactless payment, and another 25% that previously offered contactless payment don’t take any other form of payment.
When asked to rank their preferred modern payment solutions, contactless credit cards came out on top. Following contactless payments, physical credit cards, contactless debit cards, and cash were also popular top picks. Fewer people liked the option of handing over their debit cards or issuing mobile payments for their purchases. Checks and electronic bank transactions were the least popular options.
For some consumers, the newness of contactless payments still leaves them with some doubts. Sixty-three percent of respondents indicated contactless payments made making purchases too easy, while 47% said it made their credit card information less secure, and 42% said it made them worry about their personal finances. In reality, contactless payment can actually be more secure than conventional payment methods because the technology does not transmit your name, full credit card number, or the security code of your card.
Eighty-seven percent of consumers using contactless payment believed it slows the spread of COVID-19, and 58% upgraded their credit or debit cards to be contactless during the pandemic. Among small business owners, the leading perceived benefits of contactless payment included it being more hygienic (79%), safer for employees (71%) and customers (67%) during the pandemic, and faster for transactions (58%).
Small businesses may need to consider the negative impacts of not adopting contactless payments. Sixteen percent of consumers polled indicated always asking if businesses offer contactless payment, followed by 27% who often asked for the technology and 28% who sometimes asked for it. And while 48% of consumers viewed businesses that do not offer contactless payment options the same, 31% indicated seeing these brands in a somewhat more negative light, and 8% viewed them much more negatively.
A vast majority, 92% of business owners said consumers have asked them about contactless payment options, and 68% said their customers genuinely appreciate the effort of offering contactless payments. Among business owners still not offering contactless payment options, over 91% said they have plans to offer the payment solution in the future.
Many customers are taking advantage of contactless payments, particularly during the pandemic, but some consumers remain skeptical.
Forty-seven percent of respondents admitted they don’t think contactless payments are secure, followed by 42% who preferred using cash and another 31% who don’t understand how the system works. In reality, contactless payments aren’t just a more secure method of payment, they offer fewer touch points while checking out, which can help reduce the spread of contagious germs.
Among small business owners, there is similar hesitation to adopting contactless methods. Forty percent indicated a preference for cash, and 38% simply didn’t find it necessary. For some, the roadblocks can be more complicated. Thirty-six percent of business owners said they can’t afford to upgrade their point of sale systems, 36% of business owners have had issues in the past, and 34% just don’t trust contactless payments.
Digital banking was already on the rise, but the COVID-19 pandemic has pushed both consumers and business owners to adapt to these new technologies even faster. As the popularity of contactless payments continues to rise, some analysts are wondering if we even need cash to operate at all.
Among the more than 1,000 people polled, 60% indicated their support for becoming a cashless society, while roughly 21% were unsure. Less than 1 in 5 respondents opposed the idea of forgoing cash completely. Thirteen percent of people also acknowledged they stopped carrying cash on them since the pandemic began.
Even if they weren’t looking for more convenient payment solutions, consumers are cognizant that contactless payments offer fewer touch points when shopping, and many believe it will help slow the spread of COVID-19. Customers are using contactless payment more consistently since the pandemic began, and many business owners are making changes in their point of sale options to respect these preferences.
While the sentiment from consumers and business owners was generally positive, we found there was still some hesitation. For some customers, there’s a lack of understanding of how contactless payments work, and for business owners, there’s a potential cost barrier in allowing for contactless payments.
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For this study, we surveyed 1,013 people via Amazon Mechanical Turk. Of those, 814 were consumers and 199 identified as entrepreneurs or small business owners. Fifty-eight percent were male, 41.9% were female, and less than 1% identified as nonbinary. The average age of respondents was 39 with a standard deviation of 12 years. An attention-check question was used to identify and disqualify respondents who failed to read questions and answers in their entirety. This study’s main limitation is the reliance on self-report, which is faced with several issues such as, but not limited to, attribution, exaggeration, recency bias, and telescoping.
Are your readers conscious of reducing touch points when they’re shopping? Share the insights from our contactless payments study with them for any noncommercial use with the inclusion of a link back to this page so they have full access to our findings and methodology.