Contactless Payments Catching On In America

The use of mobile payments and contactless credit or debit cards has soared in the past few months, largely due to the coronavirus crisis.

Research by the National Retail Federation (NRF) and Forester found that consumers were worried about touching surfaces during the pandemic, leading to a rise in interest in and use of contactless payment methods.

“Health experts say there is no clear evidence that COVID-19 is transmitted by cash or credit cards but retailers are putting health and safety first and have rolled out a variety of no-touch payment options in order to err on the side of caution,” said Leon Buck, NRF vice president for government relations, banking and financial services.

However, Buck added that retailers were concerned about the fees charged to merchants to process transactions.

“The card industry should not take advantage of this situation to rake in extra fees merchants would not pay otherwise,” Buck said. “Card processing fees already drive up costs for retailers by far too much and ultimately increase prices paid by consumers.”

The State of Retail Payments study, conducted for NRF every other year by Forrester, found 67% of retailers surveyed now accept some form of no-touch payment.

Banks charge merchants a fee averaging about 2.5% when a credit card is used to make a purchase in-person, and the fee is the same regardless of whether the card is inserted, tapped/waved, or used via a mobile device. But a higher fee of about 2.8% is charged if the same card is used online or over the phone.

A study by Mastercard last year found that, between February and March, contactless transactions grew twice as fast as non-contactless transactions in the grocery and drug store categories. Mastercard reported that 79% of respondents worldwide said they were using contactless payments, citing safety and cleanliness as key drivers.

Europe is ahead of the Americas on the use of contactless payments. Visa said this month – less than a year after contactless limits increased across Europe in response to the pandemic – it processed one billion additional touch-free payments, where previously consumers would have needed to enter their PIN.

Contactless payment limits were increased in 29 countries across Europe in response to the Covid-19 pandemic. In the UK, the government is considering further increasing the limit to £100 ($138).