Even in the midst of a pandemic that emphasizes social distancing and limited contact, people still buy groceries, order takeout and make household purchases. But consumers want to limit their exposure when they transact, and the most recent research from Fiserv shows people see contactless cards as the safest and fastest way to pay.
According to Expectations & Experiences: Consumer Finances During COVID-19, a consumer trends survey conducted in May 2020 by The Harris Poll on behalf of Fiserv, 42 percent of consumers viewed tap-and-pay credit cards as the safest in preventing spread of the virus. Consumers considered cash and checks, at 6 and 4 percent respectively, the least safe in preventing spread of COVID-19.
Perceptions of tap-and-pay cards being the fastest, most secure, most convenient and most preferred method have all increased since 2019, according to the survey. For example, 37 percent of consumers said tap-and-pay cards are the fastest method, up from 28 percent in 2019, and 19 percent said they are most preferred, up from 11 percent in 2019.
Consumer awareness and use of tap-and-pay cards had already been trending upward before the pandemic. But when COVID-19 hit, use of contactless payments grew quickly, said Ellen Linardi, a Fiserv vice president who works with merchants through the Clover Network.
"Essentially, what was already a trend prior to the pandemic accelerated," she said. "What probably would have happened over a year or more has happened over months, if not weeks."
Keeping Pace With Consumer Preferences
For financial institutions and merchants, the challenge has been meeting consumer expectations that have shifted dramatically since the onset of the pandemic.
Jamie Topolski, a Fiserv director of product strategy who works with financial institutions, said the options are clear when deciding whether to issue contactless cards: capture the incremental transactions and revenue as traditional cash payments move to tap-and-pay cards or risk losing those benefits when consumers choose a different card in the wallet.
The odds are improving that one of those cards will have contactless capabilities. The Expectations & Experiences survey found about 43 percent of banking consumers said their card has tap-and-pay functionality. Of those, 22 percent said they tap their card more than they insert it, while 27 percent said they use the two functions equally.
"I do it," Topolski said. "I have two cards in my wallet, and I use the one that supports contactless more often now."
Financial institutions recognized that trend before the pandemic, he said, though much of the focus revolved around transit in large U.S. markets where agencies were moving from closed-loop payments to open-loop contactless. Transit ridership might be reduced for now, but COVID-19 has only underscored the growing preference for contactless.
"Before the pandemic, tap-and-pay cards were extremely convenient and fast," Topolski said. "The perceptions of speed and convenience have gone up, and now safety is so important."
Merchants are facing a similar choice in considering a change to accepting tap-and-pay cards. Prior to COVID-19, Linardi said, making the change based on speedier transactions might not have been enough to motivate some merchants who thought what they have is good enough. The equation changed with the pandemic.
"Because it's connected to safety and the willingness for consumers to come back, it's actually much more than speed," she said. "Enabling contactless payments is how businesses communicate to their customers that they're ensuring consumers' and employees' safety."
Before the pandemic, tap-and-pay cards were extremely convenient and fast. The perceptions of speed and convenience have gone up, and now safety is so important.
– Jamie Topolski
A Permanent Trend?
The pandemic may fade, but Topolski and Linardi said they expect the upward trend of contactless payments to continue. Safety is a new priority, but the speed, convenience and security of tap-and-pay cards will remain.
"Even if there's no fear factor anymore, which will take a while," Topolski said, "people won't go back."
Not only are contactless payments rising as the preferred way to pay, but how consumers interact with businesses also has shifted during the pandemic, Linardi said. More people now prefer to order, pick up and quickly leave.
People eventually will adjust the way they interact with businesses as circumstances change, she said. But payment methods rarely shift backward.
"Now, we've never had a pandemic that has shifted market behavior as dramatically as what we've seen," Linardi said. "But over the years, usage trends tend to stay consistent regardless of what's happening."