- The novel coronavirus has led many in the US to rethink their daily behaviors, like how they commute and pay for things.
- Payments research and consulting firm The Futurist Group thinks that the disruption caused by the virus could lead to higher contactless adoption in the US, which has lagged other markets like the UK.
- Contactless payments eliminate the need for consumers and workers to pass cash or credit cards between hands, which could help limit exposure to the virus.
- The World Health Organization was cited recommending consumers opt for contactless payments but has since clarified that they have not issued an official warning against the use of cash, recommending consumers wash their hands after handling any physical currency.
- Card issuers are slowly circulating contactless-enabled cards into the US market and many merchants already have the necessary hardware. But consumers have so far been slow to start tapping to pay.
- Click here for live updates on the novel coronavirus.
The novel coronavirus could be the catalyst to finally push the adoption of contactless payments in the US, according to a payments research and consulting firm.
From stopping at the same coffee shop every day to taking the same route on the morning commute, it can be hard for consumers to change their habits, especially the ones they don’t really think about, like handing over a credit card or cash to make a purchase. So contactless payments, using credit cards or mobile wallets, have been slow to catch on.
For card issuers in the US, where contactless adoption has lagged some other countries, the strategy to get people onboard has involved issuing new cards, influencing merchants to enable point-of-sale card readers, and shifting consumer behavior toward tap-to-pay.
But as the novel coronavirus spreads, people’s daily routines have been disrupted and they’re starting to rethink their ingrained behaviors.
The Futurist Group, a payments research and consulting firm, thinks that the novel coronavirus could make consumers rethink the way they pay for things and drive further adoption of contactless payments in the US.
“For the first time in these extreme circumstances, people are starting to think about everyday actions, from shaking hands to handing their credit card to the barista,” said Demitry Estrin, cofounder of The Futurist Group.
After comparing consumer sentiment at the end of 2019 with data from March 3rd of this year, The Futurist Group found a 27% increase in the number of consumers that consider contactless a basic feature for their cards.
Card issuers are circulating contactless-enabled cards into the US market and many merchants already have the necessary hardware. But consumers have been slow to start tapping to pay.
In other markets like the UK, contactless payments are common. Installing tap technology on public transportation, like the London Underground, proved an effective way to get consumers used to the technology and increase adoption in other places, like bars and cafes.
And cities around the US are employing a similar strategy of using transportation as a use case, albeit a bit later than other markets. In New York, OMNY has been slowly rolling out contactless tap on select MTA subway lines.
The switch from magnetic stripe to chip cards, for example, didn’t take off in the US until 2015 when retailers like Target and Home Depot reported high-profile data breaches. Amid regulatory pressure, card issuers shifted the fraud liabilities onto merchants who weren’t accepting chip transactions. This incentivized merchants to update their hardware, and paved the way for consumers to stop swiping.
“What’s still required in order for the tipping point to occur in my mind is something that will make the consumer think about an everyday act of making a purchase differently,” said Estrin.
The WHO clarifies stance on cash amid coronavirus
While the WHO has not issued an official warning against using cash, it remains an area of concern.
The WHO declared the coronavirus outbreak a global public-health emergency on January 30, and since then, countries like Italy have gone on lockdown. And in the US, San Francisco and New York, among other cities and states, have declared states of emergency.
Last week, media reports in the UK cited the World Health Organization saying that cash could be spreading the coronavirus, and consumers should opt for contactless payments. Following the report, the WHO clarified that they are not explicitly saying that cash is spreading the virus, but advised that individuals continue to practice good hygiene.
The WHO told Business Insider that people “should wash their hands or use a hand sanitizer after handling money, especially if they are about to eat or before handling food.”
China has implemented a policy of deep cleaning and potentially destroying infected cash. South Korea’s central bank is keeping cash received from local banks in safes for two weeks, and sometimes burning infected bills.
The Louvre museum in Paris is no longer accepting cash in an effort to persuade employees worried about the coronavirus to keep coming to work, according to ABC News.
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