There is little doubt that the Covid-19 pandemic worldwide has shifted online purchasing habits dramatically around the globe. But recent widespread stay-at-home orders that forced many consumers online to purchase almost everything from clothing to food items is only one factor impacting the contactless payments landscape. There is also the deployment of 5G to consider in the next few years when it comes to contactless purchasing.
Card Not Present spoke with with Daniel Kornitzer, chief business development officer with Paysafe, about some recent research the firm conducted on contactless payments and what he foresees as important trends that will impact the industry in the next few years.
CNP: How do you think Covid-19 has impacted the contactless payments landscape?
Daniel Kornitzer: It’s been a major catalyst for the current surge in contactless payments in the U.S. Driven by an unprecedented economic environment, we’ve seen an increased roll-out of contactless-enabled cards, strong growth in contactless-capable POS devices, increased usage of mobile wallets and more.
Our research in April on the pandemic’s impact on consumer payment trends revealed that though contactless adoption is still more limited in the United States than other global markets, 69 percent of U.S. consumers agree that it’s more convenient than cash. Another 60 percent of Americans and Canadians said they’re more comfortable using contactless cards now compared to a year ago. Consumers are recognizing the benefits of contactless, including a faster and seamless checkout across multiple devices.
CNP: You found that using contactless during the pandemic has made most North Americans more comfortable with the idea of continuing to use it in the future. Why?
Kornitzer: The speed and convenience of contactless is obvious to consumers once they’ve experienced it. With the low but ongoing contagion risk from Covid-19 during an in-person transaction, contactless also provides some comfort to consumers. It’s no surprise that half (50 percent) of U.S. consumers we surveyed in April had paid by contactless at least four times in the last month.
Overall, however, there’s been a bigger shift from card-present payments to card not present (CNP). Consumers are shopping more online because they either cannot, or are choosing not to, visit physical stores. This has been due to lower access to stores during lockdowns, a desire to limit their exposure to the virus or even simply shopping for Covid-19 specific items.
To give you an idea of how big the CNP shift is: In the U.S., a quarter (25 percent) of consumers reported that they’re shopping online for the first time ever. This is significantly higher than the 18 percent reported globally.
CNP: How will technology like 5G impact the payments landscape?
Kornitzer: The fifth generation of mobile data networks will accelerate the adoption of alternative payment methods. Through 5G networks, digital payment methods like mobile wallets could experience even more use cases and be preferred over traditional methods like cash.
5G is projected to eliminate connection issues and other potential errors in the transaction process, delivering faster uploads and downloads. This will effectively decrease the time between payment and payment confirmation of each consumer transaction made for both digital and retail payments.
Your research also finds 84 percent of consumers who adopt mobile technology overwhelmingly prefer it over cash in the payments landscape. Ultimately, do you foresee a shift to a payment landscape where contactless payments are more common than cash or in-store payments? Why?
Kornitzer: As connectivity improves and product and infrastructure evolves in the U.S., consumers will likely increasingly adopt contactless for a new and improved payments experience. That said, aside from contactless limits on transaction amounts, concerns over fraud and security—like biometric payment authentication as a verification method for mobile payments—still remain. In our findings, 55 percent of U.S. consumers reported being cautious about mobile wallets due to potentially getting their phone stolen.
This means cash isn’t becoming obsolete any time soon. In fact, some consumers are uncomfortable with the idea of being unable to access cash (72 percent of global consumers). Therefore, cash remains central to the payments ecosystem, with close to two thirds (60 percent) of U.S. consumers stating that it’s the most reliable form of payment during a crisis.