Guest Post: The Rise of Contactless Payments in a Coronavirus World
By Nick Starai, Chief Strategy Officer, NMI.
Even before the coronavirus pandemic changed the world as we know it, contactless payments were experiencing a slow but steady increase in the United States. But now with social distancing measures and the desire to limit physical interactions with potentially contaminated public surfaces, contactless payments are becoming even more appealing.
The World Health Organization recently recommended using contactless payments whenever possible to reduce transmission of the virus via cash. According to recent survey data from RTi Research, Americans were already thinking the same thing. Nearly a third of respondents, 29 percent, said they are extremely or very worried about coronavirus transmission from cash. But cash isn’t the only source of concern. The survey also uncovered wariness related to traditional credit and debit cards, with 22 percent citing a fear of possible transmission as a result of paying with a card.
To reduce risk, many consumers are turning to contactless payments. In fact, RTi Research reports that 30 percent of consumers have started using contactless payment methods to minimize risk since the pandemic began. While contactless payments were trending up before, they’re certainly experiencing even higher gains now.
U.S. Contactless Adoption Choices
Just as America was slow to adopt EMV, it now lags much of the world in contactless card circulation. Back in 2015, card issuers took the more affordable route of issuing EMV cards without contactless antennas. So many are still playing catch-up.
Since July 2019, American Express has issued contactless cards to all new customers and is upgrading existing customers with contactless as cards expire or upon customer request. Visa shot past 100 million contactless-enabled cards in 2019, and now expects to have 300 million cards in circulation by the end of this year.
Fortunately, consumers who are still waiting to receive contactless cards have another option at their disposal. They can make contactless payments with NFC-equipped devices like smartphones, tablets and watches using mobile wallets like Apple Pay, Samsung Pay and Google Pay. Shoppers tap and pay from their devices with minimal interaction and risk of virus transmission. Although the standard instructions are to tap to pay, the reality is that shoppers simply need to bring devices in close proximity to NFC-enabled payment terminals without actually making physical contact.
In these uncertain times, exchanging cash or using a PIN pad when shopping creates unnecessary health risks that many U.S. consumers aren’t willing to take. Whether purchasing takes place with contactless cards or NFC-enabled personal devices, cash and traditional card-based payment methods are on the decline.
It’s still unclear if the recent surge in contactless payment adoption is a temporary response to the COVID-19 pandemic or if it represents a more permanent change in consumer purchasing behavior. However, RTi Research did indicate that 70 percent of new contactless users believe they will continue to use the payment method even after the pandemic dissipates.
Much of the world already knows that contactless payments really are more convenient and secure. Now, American consumers are experiencing it firsthand for themselves.
Nick Starai is chief strategy officer and one of the co-founders of NMI who played an integral role in the formation and launch of the NMI payments platform in 2001. He drives the strategic direction of the company and supports NMI’s enterprise clients and overall partner success. He also brings 17 years of experience in the payments and technology industry.
Nick will be presenting on contactless payments at TRANSACT Connect, ETA’s fully virtual payments event, on May 13th at 3:30 pm. Click here to register. NMI is also exhibiting on the virtual show floor. Click here to learn more.