The U.S. Payments Forum released its latest Market Snapshot providing a look at the state of the industry.
With more emphasis on reducing transmission of germs and bacteria than ever, the payments industry has prioritized the touchless customer experience. One of the major parts of this shift has been accelerated contactless adoption. Visa reported that contactless usage in the U.S. has grown 150% since March 2019. Nine out of the top ten U.S. issuers are actively rolling out contactless cards to customers, with 175 million Visa contactless cards in the market. Mastercard reported a 40% jump in contactless payment transactions during the first quarter of this year alone, and found that 80% of contactless transactions are under $25, a range typically dominated by cash. In the U.S., Discover Network experienced a 46.1% increase in contactless spending in-store from Q4-2019 to Q1-2020.
This adoption comes alongside a change in consumer beliefs, with 50% of respondents to a recent American Express survey agreeing that contactless payments are safer for personal health than paying with cash or inserting a card. The survey also found that 58% of consumers who have used contactless are more likely to use the technology now than before the pandemic. Stakeholders at the recent U.S. Payments Forum virtual meeting, held over a two-week period this July, agreed that contactless adoption will continue to grow as consumers rapidly get comfortable with the technology.
“The COVID-19 pandemic has brought immense change to the payments industry, shown in how effectively merchants have responded to calls for cleaner payments and reduced touchpoints across brick and mortar stores,” said Randy Vanderhoof, director of the U.S. Payments Forum. “Industry leaders are dedicated to addressing these necessary changes and are still meeting virtually to remain connected in these times. Merchants and issuers are working to offer as many options as possible for consumers.”
Alternative shopping methods like curbside pickup, online ordering/delivery, pay-by-the-phone, and Buy-Online-Pickup-In-Store (BOPIS) have been increasingly offered across markets. A recent report from Adobe Analytics found that BOPIS increased 208% between April 1 and April 20 compared to the year before. American Express also found that consumers are 16% more likely to purchase online or by app for curbside pickup since the outbreak. This shift in consumer expectations for alternative shopping experiences has opened up omnichannel alternatives to many small and medium merchants and is a change that experts at the meeting agreed would expect to continue even after the pandemic. To help support further changes that respond to the pandemic, the Forum released a white paper and infographic containing tips for cleaner payments at the POS.
Forum Priorities: Preparing for long-term change in the industry
The industry has made great efforts to keep up with the changing needs and desires of consumers during the pandemic, with excellent progress in new, touchless experiences and options for cleaner shopping and payments. The long-term effects of the COVID-19 pandemic on retail, however, are still unclear.
The Forum is committed to taking a long-term view of evolving consumer behaviors, including their comfort with new payment technologies. Working Committees are making plans to explore the fraud ramifications of the shift to e-commerce without the needed protection of fully implemented security technologies. The Forum will continue to introduce and encourage implementation of fraud fighting tools like 3DS, Secure Remote Commerce (SRC) and others.
The Forum has numerous EMV and emerging technology-related education projects currently underway, including:
- A resource on device authentication and cardholder verification techniques for mobile in-app and remote payments
- A resource on contactless payments limits and best practices for contactless acceptance
- Educational podcasts on mobile wallets
- A webinar on dual-interface (contact and contactless) card personalization
- A resource on cardholder verification method (CVM) choice at unattended terminals
- A white paper on debit routing and tokenization with card-on-file transactions
- A guide providing best practices on customer messaging for transit contactless open payments
- A white paper providing recommendations to enhance the understanding of common EMV terminology used in certification intake forms
- A project documenting retailer and financial institution use cases for mobile driver’s licenses
The U.S. Payments Forum published the following resources over the past quarter: