The ongoing COVID-19 pandemic has massively affected most industries across the globe. Some, like tourism and hospitality, aviation, and non-essential physical retail, have seen various issues. However, industries like e-commerce, healthcare, and telecoms have benefited from the pandemic.
Contactless payments have been one of the latter as well. We had already been moving towards a cashless society, especially in Europe, where many countries are pushing for change. The pandemic has only managed to speed things up.
Massive Impact on Business
As expected, despite the negative impact COVID-19 has had on business overall, the world economy is already making a comeback. The demand for many non-essential goods and services had significantly decreased at the start, but it’s starting to come back, and a wave of optimism is already kicking in.
According to a McKinsey global survey from April 2021, as many as 73% of executives believe the global economy will improve in the next six months. This optimism has been rising since the start of the year, with the percentage being much lower (56%) in January.
Despite the lowered demand for goods and services that’s yet to reach pre-pandemic levels, contactless payments are still rising in popularity.
Cashless Society Gains a Boost
Contactless payments had been a rising trend even before the pandemic. However, with the current situation, it was only natural for many merchants and consumers to accept this form of payment fully.
It minimizes the risk of novel coronavirus transmissions, and it’s just one of the many changes in behavior we can all easily adopt to slow down the spread.
At the start of the pandemic, cash was used in less than half of all in-store payments across Europe, 44% to be exact. In the first couple of weeks after COVID-19’s spread across Europe, that percentage decreased by around 10% on average. In the UK, it dropped by as much as 50%.
As cash payments dropped, contactless payments grew significantly — a trend that has gained momentum ever since Europe mandated in 2014 that most stores introduce terminals that accept contactless payments. The acceptance rate increased substantially from 2018 to 2019, jumping from 42% to 70%.
As for payments themselves, Mastercard reported in 2020 that 75% of all transactions in its network in Europe are contactless.
More recently, or only a year after the pandemic began, Visa has hit a significant processing milestone — the company reached one billion PIN-free or contactless transactions. What’s more, over 80% of all in-store Visa-enabled transactions across Europe are now contactless.
What Will the Future Bring?
Both Mastercard and Visa have increased the limit for PIN-free payments in the contactless system during the pandemic, and the UK is looking to increase it even further in 2021, to £100. Still, hygiene concerns are the biggest reasons why so many have adopted the contactless system.
Even when the world goes back to normal, we fully believe that contactless payments will remain the first choice for most consumers, as many recognize how easy and convenient they are.
Merchants will undoubtedly encourage consumers to adopt the trend as they benefit from a faster output, a direct result of contactless payments.
We at Walter fully believe that contactless payments are the way of the future and are always ready to do our part to make global payments more accessible, more convenient, and of course, more secure.