Before COVID-19, the contactless transaction was just an option, today it is much preferred for safety and health reasons. Because of this, market advisory firm ABI Research sees that globally, contactless adoption will increase between +6% to +8% when compared to pre-COVID-19 expectations.
According to its latest research, the issuance levels forecast of card issuance will grow by 14% YoY, accounting for more than 65% of all cards issued in 2020. An additional 110 million contactless payment cards expected to be issued in 2020 when compared to pre-COVID-19 forecast expectations
“The way people pay for things is rapidly evolving and changing,” said Phil Sealy, research director at ABI Research. “COVID-19 has driven a significant shift in consumer spending habits spurred by economic uncertainly and a push toward the purchase of mainly essential items. There is also a surge in e-commerce whereby consumers are becoming even more heavily reliant on online retail channels to avoid crowded places to limit social interactions.”
Sealy also pointed out that contactless transactions were already gaining ground prior to the global health crisis. However, the aim to contain the virus would drive the adoption sooner that was previously forecast. Countries and economies that still consider cash is king would drive the figures up as governments and health authorities push for limiting contacts.
ABI Research also noted how major payment networks, including Visa and Mastercard, in their own way help contribute to the containment of the virus. The companies have increased spending limits to encourage more people to use contactless payments. Many national and local authorities and governments, as well as merchants, are encouraging digital payments over cash, using the digital transaction method to limit contact with items and objects that are communal and used by multiple people — in this instance, point-of-sale terminals.
While contactless payments are encouraged, and e-commerce is also helping keep economies afloat, there is still the need for brick and mortar stores particularly supermarkets, ABI Research said. Apart from health measures to contain the virus such as physical distancing and protective screens for its frontliners, companies are encouraging digital payments over cash, and where possible, completely contactless transactions.
“COVID-19 is not only bringing contactless to the forefront of the digital payment experience but also other next-generation payment card form factors. As consumers increasingly use and become more reliant on contactless, the question of how best to secure and limit fraud on increasing contactless transaction volumes and values will come into play,” Sealy says.
ABI Research said biometric payment cards are well-positioned as a solution that offers a contactless payment card experience without limits. The use of multifactor contactless transaction authentication will become a key theme post-COVID-19, extending security previously reserved for high computer-powered devices such as smartphones and mirroring the experience and security features onto the passive payment card form-factor.