Consumers are taking extra precautions to avoid touching surfaces and limiting their interactions when shopping in stores. Whereas Americans were slow to embrace contactless payment methods, many now feel it is cleaner than paying with cash due to the coronavirus. Studies indicate contactless payments have grown 20 percent since early March. This rate of adoption is expected to increase in the future steadily. As reported in the Deloitte State of the Consumer Tracker, 40 percent of consumers currently feel safe shopping in stores, partially due to their ability to purchase merchandise with contactless payments. “Overall, we believe there will be an accelerated adoption, coming from retailer push and customer demand in this space,” says Rob Harrold, a senior manager with Deloitte’s strategy and operations practice. “What was more of a convenience option has now turned to a ‘safety’ feature.”
- 55 percent of consumers are concerned about handling cash
- 81 percent of contactless payment transactions are less than $25
- 69 percent of users feel contactless transactions are more convent than cash
- 85 percent of mobile wallet users say they will be using the payment method in two years
Mobile Wallets Offer Options
Realizing that consumers are more likely to shop in environments where they feel safe, many retailers now offer various payment options. While most people are familiar with Google Pay, Apple Pay, and Samsung Pay, smaller retailers also gravitate to Square and Venmo. According to Richard Crone, CEO of Crone Consulting, “Consumers want safety, and they want to know when they have to touch something that it’s sanitized. There’s nothing more assuring than their own phone.” Consumers are so inclined to use contactless payment methods, 38 percent are switching to credit cards that offer this functionality.
Faster process at checkout
High on the list of customer’s complaints is waiting in the checkout line. Contactless payments are beneficial to both the customer and the retailer. It is a faster process at checkout, and reduces the number of people requiring service from the cashier. Fewer frustrated customers also mean fewer abandoned sales. Home improvement retailers take pride in delivering fast service and enjoyable shopping experience. Customers appreciate it when retailers take extra measures to make buying more convenient.
- Tap to pay transactions are simple, convenient and secure
- Signage placed near the entry and checkout area helps customers identify payment options
- Displaying signage generates 2.5 times more taps at checkout
- Consumers are three times more to think merchant is reputable
Strong Protection Against Fraud
Credit card fraud is a real fear. In 2018, the U.S. was the global leader, with losses totaling $24.6 billion. Tap to pay methods use enhanced security technology to combat the rise in fraud. The transition to EMV chip technology has been a significant step forward in securing payment terminals for merchants. Terminals that accept contactless cards are fully capable of other payment methods using watches and other wearable options.
Investing in the Future
Consumers will continue to use contactless payments even after the pandemic is over. The value of transactions in the U.S is expected to increase from $178 billion in 2020 to $1.5 trillion in 2024. According to Juniper Research, global transactions are currently $2 trillion and is projected to rise to $6 trillion in four years. Shoppers who, at one point, were wary of the new technology, are now comfortable with this form of payment. They enjoy the speed and ease of use.
- Ten times faster than other methods of in-person payment
- 84 percent of users prefer the method to cash
- 50 percent of users make four or more contactless payments per month
Consumers have many options when deciding where to shop. Retailers who decline to accept contactless payments may ultimately lose business to competitors who consider the technology to be an investment in the future. Offering more options increases the efficiency of the business and motivates customers to shop more frequently. The ability to make contactless payments is particularly attractive to shoppers age 35 and younger who value credit cards offering rewards and benefits. For 43 percent of these consumers, the ability to make tap and go payments is an essential factor when selecting a card. Now is the time for small businesses to prepare for the next big thing in retail.