Blog
Monday, June 29, 2020

The Biggest Barrier to Contactless Payments Isn’t Infrastructure, It’s Human Behavior

In the past, we’ve been attached at the hip to our method of payment. Whether it was a satchel of gold coins, a wallet of cash, or a card in a sleeve, commerce and trade have always been conducted with the need for contact.

  

Recent innovations, like wearable tech that enable contactless payments, have pushed the industry forward. But this year COVID-19 put its foot on the accelerator. 

 

And although global contactless payment adoption has been steadily increasing, the US market has been especially reluctant to hop on board. But Americans can no longer wait in the wings. 


The need for contactless is upon us. Change has come, and it is here to stay.


Luckily, the infrastructure and security of contactless payments already exist; the biggest barrier is simply ourselves. 

 

It Usually Takes a Generation to Change Habits


Though contactless payment systems have many benefits and few drawbacks, the transition to a completely cashless economy has been sluggish due to generational barriers. 


While our wallets may be filled with cards today, the adoption and use of cards was a slow and gradual process. At first, we were reluctant. It took decades for us to replace paper with plastic. Similarly, it will take time for us to embed the use of contactless payments into our daily transactions.


Apple Pay’s lack of success in the US, while introduced with much fanfare, is a testament to this, as the younger market of digital natives have been quicker to adapt than their elders.


But older Americans might begin seeing the value of trading the security of tangible funds for another ideal: cleanliness. An April 2020 Mastercard study cited, “79 percent of worldwide respondents say they are now using contactless payments, citing safety and cleanliness as key drivers.”


“I was recently at a hardware store waiting to check out,” recalls Darren Beyer, Qolo Chief Product and Strategy Officer. “An elderly woman in front of me pulled out her card to pay, looked at the plastic-covered terminal, then to the cashier then back to the terminal--clearly reluctant to risk infection by putting her card in the reader. The cashier took her card, inserted it for the transaction, then cleaned it with hand sanitizer before handing it back.” 


Moreover, “between February and March, contactless transactions grew twice as fast as non-contactless transactions in the grocery and drug store categories.”


Peter Colbert, CEO of Inamo, a wearables company based in Santa Monica, California sees this trend first hand. 


“It usually takes a generation to change habits, but Covid-19 is changing how people pay virtually overnight. Every cloud has a silver lining, and for Inamo it is that the demand for our technology is accelerating.”


It’s about Building Confidence, and Embracing Flexibility


Contactless payments provide consumers with greater convenience in day-to-day transactions, with the process of paying for products and services becoming virtually expedited, through the tap of a device.


However, there is a common misconception that contactless payments require connectivity to a network to function properly. But contactless payment systems are made to work offline, merely acting as proxies for cards. In other words, the infrastructure for widespread adoption is already in place. 


Opting for contactless payment use can also provide consumers with greater flexibility when engaging in physical activities, like running or walking, so they don’t have to worry about holding their wallets on them.  


Similarly, there is a freedom in having multiple ways to exchange funds. Need to split the cost of a barbeque with your neighbor and don’t have exact change, or going for a run and don’t want to carry your wallet or phone? You’ve now got options. 


It’s Time to Trust in Technology


Whether in relationships, institutions, or through business transactions, building trust is an art form; the same applies for technology. It’s easy to trust in what you know. But small steps can help Americans bridge the gap. Take the checkout line at the grocery, or department store, for example. 


In an effort to avoid the possibility of wasting time or having their contactless payment method rejected, users may opt for traditional payment methods instead. However, according to Visa, the majority of merchants in the US already allow customers to tap to pay at checkout. In fact, "64% of grocery stores, 81% of quick service restaurants, and 92% of drug stores and pharmacies accept tap to pay."


Concerns of security and data privacy are also a prominent reason for the lack of widespread contactless adoption. But, it’s clearly more secure to carry a proxy for wealth rather than constantly have it on your person.


Unlike losing a wallet, losing a device is less cumbersome to recover, as they are protected with multiple layers of security encryption, and losses can be instantly reported to intercept any attempts of purchases.


We Need to Accept that Normal is Gone


As the pandemic continues to steer people clear of each other for the foreseeable future, contactless payments have an important role to play. 


The quicker we can part with the traditional nuances of reaching for our wallets, and instead embrace these digital proxies for payment, the better off we’ll be.


Without a doubt, we are headed towards a primarily cashless--and cardless--society. As in many areas of life, the old normal is gone.