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Data for today’s episode is provided by Mercator Advisory Group’s report –COVID-19: The Power Behind Contactless
Long before COVID-19, Debit Issuers Were Championing Contactless Transactions:
- Contactless transactions require purchasers to initiate a payment by waving their form factor–card, phone, or wearable–within three inches of a merchant’s terminal.
- The motivation for issuers is the opportunity to convert more cash purchases to interchange earning card transactions.
- Convenience and checkout speed drive adoption from merchants and purchasers alike–markets outside the U.S. have embraced these benefits.
- The Reserve Bank of Australia reported that in 2019, 83% of in-person point-of-sale transactions were contactless, with a substantial preference for cards over mobile or other devices.
- UK Finance reported that in March 2020, 45% of all debit card transactions were contactless in the U.K.
- Payments Canada noted in its 2019 Canadian Payments Methods and Trends report that nearly 60% of debit card transactions were contactless.
- In contrast, pre-COVID adoption of contactless card and mobile payments in the U.S. was tepid at best.
COVID-19 has created consumer interest and use of contact-free payment experiences as fear of infection from surfaces, including a point-of-sale (POS) device, drives new behaviors. While reports and surveys proclaim cardholders’ interest in contactless technology, the actual number of contactless debit transactions authorized on a contactless card or mobile app remains elusive. This report, COVID-19: The Power Behind Contactless, considers the available market data and Mercator Advisory Group research to better understand the level of contactless payment activity and the degree to which COVID-19 is affecting its growth.
“The onset of the coronavirus created the perfect storm of events that is driving awareness more quickly than all the promotional activities have to date. Cardholders’ wellbeing is the incentive to adopt a new payment method. More consumers are now aware of the contactless capabilities they have on their debit card, which is driving new users in addition to increased use by current users,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.