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Virus Kicks Contactless Payment Adoption into Overdrive

Retailers seeking to put shoppers at ease throughout the COVID-19 pandemic may need to go beyond social distancing measures and other precautions by prioritizing where safety issues often may persist―at the checkout.

Seventy-nine percent of global shoppers say they are now using contactless “tap to pay” payments, citing safety and cleanliness as key drivers, according to a study from Mastercard of 17,000 consumers across 19 countries. As many as 82 percent of these shoppers view contactless, touch-free payment experiences as a “cleaner” way to pay at checkout. According to a Paysafe study of 8,000 global consumers, 56 percent say they are happier to use contactless cards than they were last year.

This appears to have an effect on long term paying habits, as 84 percent also admitted they were now thinking differently about how they make payments. In fact, 48 percent of consumers say they will be reducing the amount of cash they handle in the future due to health and safety concerns.

“Our latest ‘Lost in Transaction’ research shows that consumers are already adapting to challenges in purchasing and getting to grips with alternative payment methods,” said Daniel Kornitzer, chief business development officer at Paysafe. “Both payment providers and retailers must adapt in line with the demands of consumers and the requirements of the situation. Ultimately, the change and improvements we make to digital commerce throughout this pandemic will pave the way for the future of both digital and in-store payments.”

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Mobile has a place as a preferred payment option in this safety-driven environment as well. According to an IBM study of more than 25,000 U.S. adults, nearly 40 percent of consumers surveyed said they are likely to use contactless payment options via their mobile device or credit card when shopping due to their concerns about COVID-19.

When it comes to playing favorites, the Mastercard study pointed out that nearly half of respondents (46 percent) have swapped out their preferred “top-of-wallet” card for one that offers contactless―and this proportion climbs to 52 percent among those under 35 years old.

“Social distancing does not just concern people’s interactions with each other; it includes contact with publicly shared devices like point of sale terminals and checkout counters,” said Blake Rosenthal, executive vice president and head of Mastercard Acceptance Solutions. “Contactless offer consumers a safer, cleaner way to pay, speed at checkout, and more control over physical proximity at this critical time.”

With the number of contactless transactions growing twice as fast as the number of non-contactless transactions globally at grocery stores and pharmacies, apparel retailers that are preparing to open their doors should consider the implementation of a contactless POS platform if they have not done so already. In fact, this trend appears to be here to stay as 74 percent of shoppers state they will continue to use contactless payments post-pandemic.

What’s more, because 80 percent of contactless transactions are under $25, where shoppers typically pay with cash, contactless payments would likely not be hindered by the price range of products offered in stores.

Overall, the shift to contactless is certainly a decision retailers will have to mull over, especially as they reopen stores. As shoppers express anxiety over returning to malls and department stores, apparel retailers in particular are going to have to take every precaution necessary to ensure shoppers will feel secure about visiting a store.

For example, lockers designed to eliminate person-to-person communication or employee handling of garments are an additional technology that can ease consumer anxiety in stores. In fact, younger shoppers have already warmed up to these “unattended retail” concepts. According to a joint study from PYMNTS and USA Technologies, 35 percent of millennials and 29 percent of Gen Z shoppers said they’d be willing to spend more at these unorthodox shopping channels if non-traditional products were offered.

As consumers increasingly seek out ways to quickly get in and out of stores without touching terminals, Mastercard revealed that contactless transactions experienced 40 percent growth globally from the first quarter of 2019 to the first quarter of 2020.

Mastercard has been taking steps of its own to ensure more shoppers and retailers have the resources to safely pay, receive payment and maintain operations during the COVID-19 crisis. The company already has increased contactless payment limits in more than 50 countries worldwide across Europe, the Middle East, Africa, Asia Pacific, New Zealand, Latin America and the Caribbean, and Canada, among others.

Thus far, there has been no such mandate or recommendation for retailers to implement contactless payments technologies. While the Retail Industry Leaders Association and the National Retail Federation released a three-phase Blueprint for Shopping Safe as an industry-wide recommendation for retailers, the only mention of “contactless” refers to contactless curbside pickup outside of stores and in-home deliveries.

However, the blueprint recommends retailers clean and disinfect high-touch areas routinely, particularly in spaces that are accessible to staff, customers, and suppliers, including credit card machines, keypads and counters.