Will Consumers Stick With Contactless Payments?
Contactless payments took a while to arrive in the U.S., but the transaction method is enjoying a growth spurt in the retail world, a trend that seems almost certain to continue through 2021.
According to a new study from the National Retail Federation and Forrester Research, 67% of retailers accept one or more forms of contactless payments. The majority of retailers — 58% — take contactless cards that consumers either wave or tap at payment terminals. That’s up from 40% last year. Mobile wallets also are finding more popularity, with 56% of merchants accepting that smartphone payment method, up from 44%.
The rise of contactless payments in U.S. retail came on slowly, at least when compared to much of Europe and Asia, but gained energy in the year or so before the pandemic. The spread of the coronavirus and the resulting health restrictions and protective measures have put no-touch transactions top of mind for consumers and merchants — a signal of where some retail innovation efforts might be focused in the coming months and in 2021.
Ample Room for Growth
Since January, the new report found, retailers have reported a 69% percent increase in contactless transactions. The trend promises to continue into 2021 and beyond, with 94% of retailers anticipating more contactless payment growth over the next 18 months. Even so, contactless payments still have ample room for growth in U.S. retail. That’s because the report found that only 19% of retailers said contactless accounted for more than half of in-store transactions, and 30% said it accounted for no more than 10%.
The future of contactless payment growth in the U.S. depends not only on retailers and their ability to deploy appropriate payment infrastructure and encourage use. Consumers must get on board, too. According to a separate Forrester report, about a fifth of U.S. consumers — 19% — said they have recently made a digital payment (not just contactless) for the first time inside a retail store.
Of that group, 62% had used their phones for the transaction while 56% had used contactless cards. Those experiences were apparently positive, as 67% of those consumers said they were satisfied with the transaction, and 57% said they would employ those payment methods again once the pandemic eases and in-store shopping was considered safe.
“Touchless payment methods are an important part of ensuring the health of retail workers and consumers but they do raise concerns about the security of payments and the fees charged to merchants to process transactions,” said Leon Buck, the NRF’s vice president for government relations, banking and financial services. “Retailers, banks and card companies need to work together to ensure that these transactions remain secure. And the card industry should not take advantage of this situation to rake in extra fees merchants would not pay otherwise.”