Before the pandemic, Canada had already adopted contactless payments but usage has accelerated significantly due to COVID-19, a trend seen in many countries. COVID-19 has highlighted the importance of contactless payments from a health and safety perspective.
Today, nearly half of consumers say they would not shop at a store that only offers payment methods requiring contact with a cashier or shared device, according to Visa’s Back to Business study. And, 67 per cent say they would move to a new business with contactless payment options.
Contactless card adoption is accelerating
According to a recent Pulse survey, 2020 is the year of contactless. Pulse found that with contactless viewed as a “safer” payment method in light of COVID-19, the adoption of contactless cards is likely to accelerate, and tap-and-go transactions are expected to increase. Contactless options are expected to be more widely available in retail locations, online and at point-of-sale.
“Recently, with encouragement by the major payments networks, more issuers have become interested in issuing contactless cards and more merchants have turned on the ability to accept contactless cards. The pandemic has created a significant shift in consumer payment behaviour and accelerated contactless payment adoption in North America,” said Scott Johnson, Senior Vice President, Galileo Financial Technologies.
A recent survey by Mastercard shows 76 per cent of Canadians say contactless payments are now their preferred way to pay.
According to the recent Pulse survey, contactless card issuance is now the top priority for issuers in 2020. Two in three issuers will be issuing contactless debit cards by year-end 2020, while only 9 per cent of the issuers surveyed have no plans to offer contactless this year. Penetration of contactless cards is expected to reach 36% by year-end 2020, and 87% by year-end 2022.
“With the need for continued social distancing, we have seen a significant number of Canadians turning to contactless payments for everyday purchases as they seek cleaner, touch-free payment options,” says Sukhmani Dev, Vice President, Product Management, Digital, Cyber Security and Intelligence Solutions, at Mastercard in Canada.
There’s no doubt the novel coronavirus has changed our world forever. But when the pandemic is over and the threat of COVID-19 is no longer present, what will contactless payments look like? We will be living in what has been characterized as a ‘new normal’ and that will include more contactless methods to conduct business.
Financial institutions and retailers must adapt the customer experience
Dev says that now that Canadians are using contactless in a major way, the key to keeping it successful post-pandemic is to make sure their experience is reliable and similar wherever they shop.
“E-commerce has experienced significant growth recently, with sales more than doubling in Canada for the month of May. Now, more than ever, there is a need for a seamless and consistent online checkout experience across all digital channels. Whether consumers are making a purchase from their laptop or phone, they should have a consistent experience,” Dev says.
Companies, whether brick and mortar or digital, will have to make sure there are no surprises and no hurdles for customers to overcome when using contactless payments.
Cyrielle Chiron, Head, Research and Strategic Foresight at Payments Canada, says the primary payments focus should be on the customer experience. Chiron says companies need to change with their customers. She echoes that COVID-19 has accelerated the inevitable – that we will be mostly cashless in the future. But now, companies big and small need to accommodate the rapidly changing customer needs if they are going to stay viable.
“During the pandemic, cash and cheque payments have declined dramatically and have been replaced by the contactless payments. The pandemic is the catalyst for transforming the Canadian payments landscape. But this shift was already underway. As a business owner it’s important to adapt if you want to give consumers the choice to pay the way they want,” Chiron says.
“Now that consumers have embraced contactless payments, we expect they’ll continue using contactless cards for the speed and convenience after the pandemic,” said Johnson with Galileo Financial Technologies. “One of these key conveniences is one-click push provisioning, which we offer in real time, so consumers can quickly and easily fund their mobile wallets, including Apple Pay, Google Pay and Samsung Pay.”
Customers continue to prefer financial institutions that have easy-to-use mobile apps and will expect contactless payment features built into their products.
“What we’re learning is that this functionality for many people is new. But once they realize how easy [it is] and are reassured that it’s secure, they are becoming quick converts,” says Jennifer White, senior consultant for banking and payment intelligence at J.D. Power. White believes customers post-pandemic will demand contactless payments.
J.D. Power finds a strong correlation between Canadians’ satisfaction with their bank’s and credit card’s mobile app and online offerings and the ease of use, speed and accessibility of the app or website.
When it comes to banking, 41 per cent of retail bank customers said they were using their banks’ mobile app more frequently than ever before and 40 per cent said they were using credit cards in a contactless manner.
Dev from Mastercard says companies risk being left behind if they don’t recognize the role of contactless payments after the pandemic.
“Canadians feel that contactless payments offer convenience, safety and cleanliness compared to other payment methods. As we look toward a new normal post-pandemic, almost eight in ten Canadians (79 per cent) say they will continue to use contactless payments,” Dev says.
The virus might have made contactless the safer way to pay, but it also shows it is the easier way to make purchases, and we expect that many Canadians will now prefer contactless going forward.
Contactless is moving Canada towards being a cashless society
According to Payments Canada, 62 per cent of Canadians reported using cash less recently than they did pre-pandemic and 42 per cent now avoid shopping at places that don’t accept contactless payments. Those are big numbers, signalling a significant shift in consumer preferences and behaviours. This will accelerate digital product development at the banks and push new services such as one-click push provisioning for wallet loads. All these improvements in the customer experience should make contactless a bigger part of the new normal, and continue to relegate cash to the margins. This may move Canada towards a truly cashless society in the near future.