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Coronavirus and Contactless Cards: Touch-Free Shopping Is the Future, and the Future is Now

A woman using a touch-free transaction to buy stuff

Things we used to take for granted are now highly scrutinized. For instance, handling fruit and vegetables in the store now brings some level of concern for many. The same applies to door handles and shopping carts. It’s therefore not surprising that many individuals are showing increased preference for contactless cards and touch-free payments. In an effort to avoid contact with surfaces, these types of digital payments may finally become commonplace in the U.S.

There once was a time when cash was king, but these days now seem to be numbered. Likewise, credit and debit cards offer convenience and security. However, they do little to reduce the risk of spreading germs. In contrast, contactless cards and digital payments offer convenience, security, and contact distancing. With the fears surrounding COVID-19, it is this latter feature that is getting consumers’ attention. And many retailers recognize this fact and are making adjustments accordingly.

“In the U.S., an event like this is likely to be the trigger point to cause that inflection point, in terms of growth. It starts with a trickle, and then you have an avalanche.” – Vaduvur Bharghavan, CEO of Ondot, a digital card services platform

How Contactless Cards and Digital Payments Work

Many of us are familiar with digital payment platforms like Google Pay and Apple Pay. Described as digital wallets, these platforms allow us to “tap and pay” for purchases at stores that recognize these systems. In essence, Apple Pay and Google Pay use authentication, monitoring, and data encryption to ensure secure and efficient financial transactions. And while these have been available for several years, digital payments only represent about quarter of all transactions. This may change significantly in the months to come as consumers rethink how they prefer to pay.

A contact-free transaction with coronavirus everywhere
The days of exchanging money or swiping credit cards might be over – thankfully, contactless cards are here.

Contactless cards offer another, and perhaps even better way, to pay using digital payments. These cards work like Apple Pay and Google Pay in that they can be tapped to complete a financial transaction. But their technology is slightly different. Contactless cards use near-field communication via a radio wave antenna. In the process, the card creates a dynamic cryptogram code that is unique for each transaction. Not only is it more secure, but it is also very convenient and fast. And perhaps for U.S. consumers, it best mimics using a credit or debit card otherwise.

“I can see consumer behaviors changing for sure from the situation we’re in. When those consumer behaviors change over several months, they tend to stick.” – Linda Kirkpatrick, President of U.S. issuers for Mastercard

American Consumers Slow to Change…Until Now

When it comes to technology, most of us assume the U.S. is ahead of the game in most areas. But when it comes to contactless cards and digital wallets, we are clearly lagging behind. In the U.S., only 3 percent of all financial transactions use contactless cards to pay. In contrast, nearly two-thirds of those in the U.K. and 96 percent in South Korea use this form of payment. Canada and Australia are also much more advanced in the use of these systems as well. Up until now, Americans have simply been unwilling to make the change and use digital payments.

This lag among American consumers isn’t due to a lack of effort by financial institutions. In fact, all the major credit card carriers, such as Visa, Mastercard and others, have been promoting contactless cards. Likewise, Apple Pay and Google Pay has done the same for their digital payments’ platform. But it appears that the coronavirus pandemic may be the key development that finally tips Americans over the edge. The fears associated with acquiring the virus via contact spread looks to be helping consumers make the shift.

“I think there will be an explosion of services and functionalities that will come out in the next few months. Necessity is the mother of invention, and there’s a whole lot of necessity right now.” – Jane Barratt, Chief Advocacy Officer at MX

More Than Just Contactless Cards to Come

With such concerns about the spread of coronavirus, contactless cards and digital payments have caught the attention of several retailers. For example, Walmart is introducing contactless pickup, delivery, as well as in-store payment options. Publix grocery stores have also implemented a tap-to-pay system in its 1,200+ stores. And even Burger King is promoting contactless drive-thru services for both payment and order pick-up. In addition to other retailers who have already embraced these payment platforms, many others are coming on board. And many analysts assume these systems will be commonplace by the end of the year.

In addition to these digital payment systems, other touchless transaction models are also gaining momentum. For example, delivery drones, which have been limited due to regulatory restrictions, may soon become another touchless option. Amazon Go stores may also expand with their Just Walk Out systems. These systems allow customers to enter the store by tapping digital payments on a turnstile. They can then collect their items and simply leave without further interactions or contacts. And companies like Starship have been advancing sidewalk robots for contactless food deliveries in some areas. All of these technological innovations are likely to receive a boost as a result of the coronavirus pandemic.

Are We at a Tipping Point for Contactless Cards?

By all accounts, it would seem that Americans are at a tipping point to convert to digital payments. But some obstacles remain. For instance, approximately 7 percent of all U.S. households do not use bank accounts. This would naturally hinder full adoption of a digital financial transaction platform. In addition, many Americans still prefer to use cash, despite the currency handling concerns. While these pose some challenges, the social impacts that COVID-19 is likely enough to accelerate the use of contactless cards. Thus, most of us can expect a major shift to touchless shopping is just around the corner.

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