contactless payment with mastercard
Results of a recent Mastercard poll found that 79% of consumers worldwide are using some form of contactless payment in light of the pandemic. — Mastercard

Diana Gamboa was in the middle of the busy tax preparation season when the COVID-19 outbreak forced her business, Diana’s Tax Services, into shutdown. As she contemplated a late April reopening, Gamboa knew she would need to change a few things.

Along with maintaining greater distance between her staff of 12 and asking clients not to congregate in the waiting area of the Las Vegas tax preparation and business consulting firm, which caters to the Spanish-speaking community, Gamboa also took a hard look at all the physical items in the office. She already had a Bluetooth-enabled contactless system through Square, but she wasn’t using it. Coronavirus changed that.

Now she uses the contactless reader to take Apple Pay, Samsung Pay and Google Pay. Clients who don’t use these payment methods can receive an invoice and enter the credit card details on their own phones.

“I was taking into account my own health and my employees’ health,” Gamboa said. “And we needed clients to feel safe that we were taking their health seriously, too.”

Gamboa no longer accepts payment by check, cash or physical cards, and plans to continue contactless technology even after the COVID-19 pandemic subsides.

As all 50 states start to reopen in some manner after two-and-a-half months of shutdown, businesses like Diana’s Tax Services are working on ways to keep staff and customers safe, and increasingly that’s around the area of payments.

Cash is notoriously germ-ridden. One study found that bacteria and viruses can survive on banknotes and coins and could lead to infections. Credit cards, too, can be a vehicle for transmission of viruses, if consumers hand over their cards for processing, enter their password or add a gratuity on a touchpad.

Contactless payment methods, like tap-and-go cards, digital wallets or online prepay, avoid all of that, allowing consumers to pay without physically touching anything in a store.

Touch-free payments had already been gaining wider acceptance, especially in transit systems and quick-serve restaurants, where shaving a few seconds off each transaction made the difference between efficiency and choking lines. Now, due to the coronavirus, more businesses are adopting it.

Once a consumer uses a product three times, it forms a habitual behavior that stays with them. Three quarters will continue to use it.

Linda Kirkpatrick, president of U.S. issuers, Mastercard

Contactless payments

Several businesses have updated their payment methods to be touch-free in the wake of COVID-19. Read on for more information on cashless and contactless payments.



A new sense of urgency

When Caboose Brewing Company in Virginia opened three years ago, alongside traditional waiter service, customers could also pay from their table using a system from GoTab. It allowed them to scan a QR code at their table, order beer and food, pay for it and have it delivered to their table within minutes.

“On a busy night, a quarter to a third of our sales came through GoTab,” said owner Jennifer McLaughlin.

As Caboose pivoted its business model during the shutdown to include grocery delivery and some beer sales, most sales were made through GoTab. McLaughlin hopes to get all transactions to be contactless as her business reopens in the weeks ahead and customers return to outdoor dining.

Coronavirus has given the payment technology a new urgency. In particular, it gives businesses yet another way to convey that they take the health of their customers seriously.

“When people come back out, I want them to feel safe, and having a contactless system is part of what will make them feel safe,” McLaughlin said, adding that her employees will also be using personal protective equipment to serve customers.

According to a recent Mastercard poll, 79% of consumers worldwide are using some form of contactless payment in light of the pandemic. Contactless transactions rose 40% in the first quarter around the globe.

“We are seeing merchants opening up acceptance to contactless where they didn’t have it before, and we’re seeing [card] issuers sending contactless cards to their customers,” Linda Kirkpatrick, president of U.S. issuers with Mastercard, told CO—. “The notion of touching a terminal or handing your card over, you want to keep all that to a minimum.”

 bags with caboose brewing co. branding
As Caboose Brewing Co. reopens in the coming weeks, owner Jennifer McLaughlin hopes to get all transactions to be contactless so her customers can return to outdoor dining safely. — Caboose Brewing Co.

United States lags touch-free adoption

The United States has been a slow adopter of contactless payments. In part, because unlike other regions of the world, the U.S. credit card industry is fairly mature and therefore has a lot of legacy technology already in place.

“Because there are so many cards, so many devices, so many terminals, we typically move slower on tech innovations,” noted Nathan Hilt, managing director and payments and financial technology solutions lead at Protiviti.

Other nations have leapfrogged into rapid adoption.

In Canada, for example, more than 50% of in-person transactions are made by contactless methods and that number is over 90% in Australia. In the United States, just a small fraction of payments use contactless technology, according to Accenture.

When U.S. retailers converted their terminals to process payments made with more secure, chip-enabled credit cards in 2015, a technology that’s known as EMV,they also acquired the necessary hardware to process contactless payments.

“Not all merchants turned on that capability because there wasn’t enough usage,” Hilt told CO—. “What I’m seeing now is that COVID may be the catalyst to finally install this thing.”

Mastercard identified a number of categories in particular where contactless use has skyrocketed in recent months: grocery, pharmacy and quick-service restaurants.

 linda kirkpatrick headshot
Linda Kirkpatrick, president of U.S. issuers, Mastercard. — Mastercard

Here to stay

Once coronavirus passes, will contactless payments remain a preferred payment method? Most likely, observers say. The pandemic is changing consumer behavior and many will continue to prefer more hygienic payment methods.

“Once a consumer uses a product three times, it forms a habitual behavior that stays with them,” said Kirkpatrick of Mastercard. “Three quarters will continue to use it.”

It may take some consumer education to make headway, though.

“Consumers may not realize that they have the technology on their card,” said Sara Grotta, director of debit advisory service at Mercator Advisory Group.

Hilt of Protiviti, meanwhile, believes the coronavirus will transform consumer behavior, as they seek out ways to minimize contact when paying. Consumers may have gotten used to ordering in advance and using a business’s physical location as merely the point of pickup.

“People have gotten used to ordering ahead, why wouldn’t they continue doing that?” he said.

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