Coronavirus and Contactless Payments

Ever since people sheltered at home, payments experts all around the world, started predicting how it would impact cash and cards. Half of consumers say they’re using contactless payments more — and more than half of U.S. consumers seem to recoil at the notion of providing a signature at the point of sale, a new Mastercard survey suggests.

About a third of U.S. consumers also said they’re using their contactless card more than other cards in their wallet, which could be a positive development for large issuers like Chase, Wells Fargo, Citi and Bank of America, which began pumping large numbers of contactless cards out last year.

The data shows 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.

The Futurist Group, a financial services and information management consultancy, conducted a two-wave study of 3,187 U.S. consumers before and after the coronavirus began spreading. About 38% of consumers now see contactless as a basic need or feature of payments, up from 30% a year ago. The proportion of consumers saying they don’t need contactless payments has fallen from 41% in March 2019 to 33% in March 2020.

“The coronavirus could be the tipping point for contactless in the U.S. much like the liability shift was for EMV,” said Demitry Estrin, founder and CEO of the Futurist Group. “Despite issuers pumping out millions of contactless cards and more stores accepting Apple Pay, U.S. consumers have just shrugged their shoulders while the world embraced contactless payments. The question has always been, ‘What will get consumers to change their payment behavior?’ Given coronavirus fears, I think we now have the answer.”

U.S. card issuers have been seeding the landscape with contactless cards since last year — an estimated 40% of cards have contactless capabilities, as banks and credit unions steadily replace expiring EMV contact-only cards with NFC-enabled cards.

About 60% of merchants’ POS terminals are contactless-enabled, supporting payments with contactless cards or mobile payments such as Apple Pay, Google Pay or Samsung Pay via devices and wearables. Mastercard surveyed 1,000 consumers April 10 to April 12.

Significantly, almost half of consumers Mastercard surveyed said they wipe their payment cards clean after using them, which could be a sign that mobile payments — which currently account for less than 10% of contactless payment transaction volume — could eventually gain more traction by eliminating the need to handle a physical card.

Now that more consumers are leery of handling cards and receipts, signatures are more likely to get phased out, streamlining checkouts.

More than three-quarters (77%) of consumers now see contactless as a “cleaner” way to pay, while 70% say it’s more convenient than cash and 67% rate it as a faster way to check out. About half say that contactless payments are more secure.

Supermarkets are the top location where consumers say they’re using contactless payments, at 85%, followed by pharmacies (39%), general retail (38%) and fast-food outlets (36%), while 9% mention using contactless payments on mass transit during the coronavirus.

More than half of survey respondents, or 56%, said they plan to continue using contactless payments when coronavirus fades