Thanks to the near-ubiquitous adoption of mobile devices equipped with NFC technology, contactless payments have become the new normal. There are now over a billion devices around the world that can be used to make contactless payments, and the list of supported retailers is growing all the time. From small businesses to big-name brands, more and more merchants are accepting contactless payments every day.
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Data for today’s episode is provided by Mercator Advisory Group’s report –2020 Annual U.S. Debit Card Market Data Review
5 Complications to Growing Contactless Payments, Even Amidst COVID-19:
- The growth of new contactless-enabled merchants will be slow as costly POS enhancements are deprioritized.
- Essential stores like large chain pharmacies, grocers, and home improvement stores were early adopters of contactless pre-Covid.
- Issuing new contactless cards takes months of planning and execution: there will be a lag in availability of contactless.
- Public transportation, a substantial segment of contactless cards, has seen a massive decline in ridership.
- Contactless transactions are not entirely “hands free”, so some consumers may still be wary.
- Currently, these are roadblock issues: issuers will pick up demand and ridership will return.
- Longer term, the pandemic will be a watershed moment that creates a compelling reason that convinces consumers to adopt contactless.
Debit card activity in the United States was very brisk in 2019, posting strong growth, but the future growth of debit cards and how they will be used will change materially as the economy is altered by the impacts of the global novel coronavirus pandemic. Mercator Advisory Group’s latest research report, 2020 Annual U.S. Debit Card Market Data Review, presents data on how the market was progressing and what the future may hold for debit card issuers and cardholders.
“Use of debit cards now and in the near term will be slowed the most by historically high unemployment, which affects typical debit card users, who make less than $75,000 annually on average, and by the closure of all but essential retailers. Offsetting this is the trend seen in the past of consumers favoring debit during recessionary periods,” commented Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group, author of the report.