Deep Dive: How Turning To Touchless Payments Can Boost Retailers Now And In The Long Term
Brick-and-mortar stores have been hit hard by the pandemic and have made serious adjustments to stay in business.
Sixty percent of small- to medium-sized businesses (SMBs) reported in March that their sales had fallen drastically, and many doubted then that they would be able to survive the crisis. Physical retailers have thus been working hard to create purchasing environments that are safe for both consumers and employees.
Workers and customers have both become wary of exchanging cash and using physical cards to make purchases, however, as many are concerned that the virus can linger on physical surfaces. Shoppers also want to get in and out of stores as quickly as possible to reduce the time they spend in close proximity to others, making speedy purchasing methods essential.
These concerns are fueling the rapid rise of touchless transaction technologies that had already been steadily gaining ground in the United States. Contactless cards and mobile wallets enable customers to wave cards, smartphones or wearable devices over point-of-sale (POS) terminals to pay, which can help them ease many of the concerns they have about in-person shopping.
This month’s Deep Dive examines how consumer demand for touchless payments is growing as the pandemic continues and how brick-and-mortar retailers are responding.
Growing Consumer Demand
A sizable share of consumers who had not experimented with contactless payments before the pandemic are now making their first forays into using the technology. A late March survey found that 30 percent of Americans made their first mobile wallet and contactless purchases during the early stages of the public health crisis. Fear of contagion appeared to persuade many to use these methods as 29 percent of those surveyed said they had serious concerns about catching COVID-19 from using cash, and 22 percent said the same about non-touchless payment cards.
Contactless payment usage has only grown over the past several months, too, indicating that shoppers have been satisfied with these transactions. More than 50 percent of U.S. consumers were reportedly using touchless payments by July, for example, and contactless card options had become the go-to method for 30 percent of shoppers by that point as well.
Some consumers have even begun to consider the lack of touchless purchasing options to be a deal breaker, while others will think twice before shopping with merchants that do not provide contactless payments. Thirty-three percent of U.S. consumers said in May that the availability of contactless purchasing options affects which stores they visit, for example. Touchless options are also favored among consumers aged 30 to 40 as 45 percent of such consumers said that they sought out such payment methods.
Shoppers are not alone in pushing brick-and-mortar retailers to accept touchless payment methods. Many employees are also concerned about the risks of handling cash and credit cards, leading some businesses to ditch certain payment methods. One Boston-based hair salon is rejecting physical payment instruments and instead requiring customers to pay via cards on file and tip via peer-to-peer (P2P) payment apps, for example.
Many physical retailers are proactively working to satisfy consumers and employees by adding touchless payment options. More than 47 percent of SMBs enhanced or added mobile wallet acceptance in response to pandemic-related health concerns. An April survey of U.S. SMBs found that 27 percent reported increased use of contactless payments, and large retailers like Costco have also provided such options to encourage in-store shopping. The brand implemented terminals and issued cards capable of accepting and making contactless payments, which helped transactions grow 60 percent year over year in March.
The Future Of Contactless Payments
The health crisis has spurred greater contactless payments adoption among both consumers and SMBs, but evidence suggests that these methods could continue finding favor after the crisis ends. Fifty percent of U.S. consumers made at least four contactless transactions in April, and 57 percent of those who did reported that they “would be more comfortable” using touchless purchasing methods after the pandemic recedes. Some shoppers may have lingering concerns about germs, and others may have discovered that they value contactless transactions’ speed.
Retailers may also find that these purchasing methods help mitigate security concerns. Contactless transaction tools tokenize payment data, protecting shoppers should criminals manage to hack into POS systems and steal card details. Merchants also do not have to worry about potentially accepting counterfeit bills — a key concern when handling cash.
Brick-and-mortar stores are redesigning their approaches to stay afloat and serve consumers and employees safely during the pandemic, and many are betting on contactless card and mobile wallet acceptance to help them do so. Safe, secure and fast purchasing options are now key to helping physical retailers bring in customers, and such considerations could also become crucial to encouraging more shoppers to return in the future.