Pandemic Boosts Adoption of Contactless Payment

But retailers worry about the increased costs of processing those transactions.

August 17, 2020

ALEXANDRIA, Va.—The number of retailers accepting contactless payment is on the rise, according to, and that increase is the result of the COVID-19 pandemic.

A recent National Retail Federation and Forrester survey found that 67% of retailers surveyed accept some form of no-touch payment, and 58% accept contactless cards, an increase from 40% last year. 

Ninety-four percent of retailers surveyed said they anticipate contactless payments to increase over the next 18 months, and 19% think no-touch payments have accounted for more than half of their in-store transactions. However, 67% of retailers said they are concerned about the costs of contactless payments, including fees for processing transactions. 

Higher transaction costs are a big concern for retailers. Banks typically charge sellers a fee of about 2.5% for credit card purchases in-store, while 2.8% is charged for cards used online and over the phone. In fact, retailers are expected to pay about $1.6 billion more in fees this year, the NRF said, citing payments analysis firm CMSPI.

“Curbside pickup and buy online, pick up in-store transactions are treated as ‘card not present’ online transactions by the processors, so retailers are paying an online rate even when these purchases are picked up at the store,” said Lily Varon, Forrester senior analyst. “Retailers feel these are really in-store transactions so there’s some pain there.” 

When surveying consumers, researchers found that 19% said they’d made a digital payment in store for the first time in May. Of those respondents, 62% used their phone, and 56% used a contactless card, per survey results.

“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,” said Leon Buck, vice president for government relations, banking and financial services, NRF.

Beyond the high fees associated with the touchless payments, retailers also cited other concerns, including cybersecurity and data privacy risks (65%), an increase in fraud (63%) and more chargebacks resulting from disputed purchases (61%).

Read more about contactless payments in convenience retailing in “What’s Next for Mobile Pay?” in the July issue of NACS Magazine.

Coronavirus Resources

NACS has compiled resources to help the convenience retail community navigate the COVID-19 crisis. For news updates and guidance, visit our coronavirus resources page.