Pandemic safety and health concerns are turning physical cash into an undesirable or avoidable mode of payment around the world.
Contactless payment is considered the more hygienic and safe way of making proximity payments. In the current pandemic, this factor is expected to have a profound effect on the payment cards market.
Using safety and health concerns amidst the pandemic, players in the contactless payment ecosystems are enjoying higher adoption rates than ever.
Globally, contactless adoption will increase between +6% and +8% when compared to pre-COVID-19 expectations, with the issuance levels forecast to grow by 14% YoY, accounting for more than 65% of all cards issued in 2020, according to new research by global tech market advisory firm, ABI Research.
Explained Phil Sealy, Research Director, ABI Research: “Although the overarching trend toward contactless was well in place prior, COVID-19 will further increase the speed of contactless adoption, particularly within countries and economies where cash remains king, and usage not only being encouraged by payment ecosystem players and suppliers but also by governments and health organizations including the WHO.”
Sealy pointed out that COVID-19 has driven a significant shift in consumer spending habits spurred by economic uncertainly and a push toward the purchase of mainly essential items. There is also a surge in e-commerce whereby consumers are becoming even more heavily reliant ononline retail channels to avoid crowded places to limit social interactions.
However, with a significant strain placed on e-commerce, physical brick-and-mortar retail still has a major role to play and it is essential in many instances. In most countries, retailers considered essential (e.g., supermarkets) remain open. They have put in place measures to help combat the spread of COVID-19 to shoppers and customers, including the enforcement of contact tracing, mask usage, temperature scans and social distancing. Many are also encouraging digital payments over cash and, where possible, completely contactless transactions.
Many national and local authorities and governments, as well as merchants, are encouraging digital payments over cash, using the digital transaction method to limit contact with items and objects that are communal and used by multiple people—in this instance, point-of-sale terminals.
“COVID-19 is not only bringing contactless to the forefront of the digital payment experience, but also other next-generation payment card form factors. As consumers increasingly use and become more reliant on contactless, the question of how best to secure and limit fraud on increasing contactless transaction volumes and values will come into play,” Sealy said.
Next-generation payment cards include biometric identification for a contactless payment without payment limits. According to Sealy, the use of multi-factor contactless transaction authentication will become a key theme post-COVID-19, extending security previously reserved for high computer-powered devices such as smartphones, and mirroring the experience and security features onto the passive payment card form-factor.
“The message is clear that contactless payments have a critical role to play in the fight against COVID-19, from a hygiene, health, and safety perspective,” Sealy concluded.