Contactless and Mobile Wallet Predictions for 2021

Has COVID-19 given contactless payment technology the boost it needed for widespread adoption in the U.S.?

If there’s one thing America loves, it’s convenience—and contactless cards and mobile wallets offer that in spades. But although these newer payment methods have been around for years, U.S. consumers haven’t exactly abandoned their tried-and-true routines of swiping their plastic at the till. As the saying goes, old habits are hard to break.

Enter 2020.

As the calendar ticked forward into the new year, the coronavirus pandemic suddenly educated consumers about the potential pitfalls of touching surfaces of every kind, including the omnipresent payment PIN pad. The National Retail Federation’s August survey says 67 percent of retailers now accept contactless payments, and 69 percent have observed an uptick in touch-free purchases since January. Meanwhile, 19 percent of consumers made their first contactless payment in the aftermath of COVID-19, with the 62 percent who paid using their smartphone’s mobile wallet outstripping the 56 percent favoring a tap-and-go card, per NRF’s joint research with Forrester.

So with the right incentives, people are willing to amend how they spend. But are these changes here for the long haul?

The Outlook for Contactless Cards and Mobile Wallets

The year ahead will yield important clues about the future of contactless cards and mobile wallets. Some experts say contactless options are poised to leapfrog traditional card payments in popularity, particularly as card issuers scrambled to raise the per-transaction spending threshold this year. And 83 percent of consumers polled for Entrust Datacard’s July survey believe in the staying power of contactless payments, while 61 percent cited the importance of their credit and debit cards coming equipped with tap-to-pay convenience.

Contactless just might overtake cash, too, as a preferred method of paying. Payments made via enabled cards and mobile wallets save consumers and merchants time by sidestepping the need to make a change, keeping queues moving along quickly. And work is underway to modernize how these systems capture tips, rather than forcing contactless payers to then tap a touchscreen to tip at eateries. Next-gen platforms could enable consumers to complete the tipping process on their own mobile devices.

Plus, comparing year-over-year numbers shows how far contactless adoption has come and the trajectory we can expect going forward. NRF’s retailer research shows that 58 percent now take contactless cards and 56 percent accept mobile wallets, increases from last year’s 40 percent and 44 percent, respectively. “While mobile payments and contactless cards have accounted for a minority of payments in the past, the pandemic has clearly driven consumers to change their behavior and retailers to accelerate their adoption of the technology,” says Leon Buck, NRF vice president for government relations, banking and financial services.

Overcoming the Accessibility Hurdle

One stumbling block to greater uptake might simply be that consumers can’t use what they don’t have. Visa rushed 80 million contactless-enabled cards into circulation in the U.S. in the first six months of the year, giving more consumers the ability to take touching out of transacting. The company’s Back to Business report shows that 48 percent of global consumers would avoid merchants that haven’t invested in contact-free solutions, illustrating the growing preference for speedy, seamless and safety-first transactions.

Contactless cards and mobile wallets each have their merits but will the market crown one the winner? For one, contactless-enabled cards more closely mesh with consumers’ legacy behaviors, offering the familiarity of the card format but replaces dipping or swiping with hovering near NFC-equipped terminals. Critics of the mobile wallets provided by companies including Apple, Google and Samsung say these require the use of compatible (and expensive) devices as well as platform-specific applications. However, consumers can store all of their different credit and debit card and loyalty details inside a single mobile wallet instead of carting around a fistful of plastic.

COVID-19 has been a teachable moment for retail tech, with perhaps no more important takeaway than the realization that consumers generally require strong external motivation to supplant their ingrained habits with new ones. Just as the pandemic consolidated years’ worth of e-commerce growth into a matter of months, the global health crisis is likely to propel contactless and mobile wallets firmly into the mainstream. 2020 will go down in history as the year that changed many things, and if recent trends hold fast, how we pay every day might be one of them.