Contactless Payments Win Over Consumers

The pandemic has fueled a rise in retailers accepting new forms of payment.

December 18, 2020

WOONSOCKET, R.I.—The pandemic has increased grocery and other online shopping, while correspondingly fueling consumer appetite for new contactless payment options in the checkout line, Progressive Grocer reports.

“Amazon Go has proven that people want to shop [via] a cashier-less shopping experience,” said Joe Lampertius, president of ChaseDesign.

CVS, for example, recently debuted a service that allows customers to use PayPal and Venmo QR codes for touchfree checkout at 8,200 stores—the first time a national retailer integrated Venmo and PayPal QR codes into point-of-sale technology.

“Putting our customers’ safety at the forefront of our innovations, we’ve focused resources on finding new ways to make customers’ lives easier and more convenient,” said Jon Roberts, executive vice president and COO at CVS Health. “Introducing more digital options, including touch-free payments at the register, is in step with changing consumer preferences.”

New data from ACI Worldwide and shows that 35% of consumers would be willing to leave their preferred grocers for others that allow them to pay in-store in a touchless manner. The survey also found contactless credit cards (43%) and contactless debit cards (39%) are the two most preferred touchless payment options, followed by digital wallets (30%), cards on file (25%) and QR codes (18%).

“In the wake of the pandemic, a new type of consumer is emerging, one who shops less in-store and represents a quickly growing part of the digital-first economy,” said Debbie Guerra, executive vice president for ACI Worldwide, in a press release. “For grocery stores, this is a huge opportunity to cater to these consumers by providing digital and contactless payment options.”

Nearly four times more grocery shoppers (16%) have shifted to buying more groceries online than in-store compared to the start of the pandemic (4%). Overall, the survey shows that 64% of the U.S. population are omni-channel shoppers who make use of digital channels to buy at least some of their groceries online. The most popular delivery channels consumers have used when shopping online for groceries during the pandemic are home delivery (23%), curbside pickup (21%) and in-store pickup (12%).

“While consumers are still purchasing their groceries in-store, particularly when buying perishable items such as fresh meats, fruits and vegetables, the survey shows an increase in online grocery shopping since the pandemic began,” Guerra said. “Consumers’ need for these necessities, coupled with the need to stay safe during the pandemic, is driving online grocery shopping whether for home delivery or curbside pickup. We expect this trend to increase as COVID-19 cases continue to climb in the U.S.”

Cash isn’t dead yet though, especially in food retail. The number of U.S. consumers who don’t have traditional bank accounts has dwindled, and many consumers continue to use bills and coins to make small purchases. Consumer backlash against retailers, including QSRs, that have attempted to ban cash has been fierce, with nearly two dozen localities and states mandating that businesses take cash, indicating the need for retailers to balance both traditional and digital payment options.

Additionally, contactless payment methods present challenges for retailers because of the higher cost to process those transactions. While debit cards are required by law to have two network routing options for retailers to choose, the major card networks block retailers’ routing choice on contactless debit payments. NACS believes this blocking of routing options is in violation of the law and has urged federal government investigations.

Read more about contactless and mobile payments in “What’s Next for Mobile Pay?” in the July 2020 issue of NACS Magazine, and QR codes in “Code Switch” in the December 2020 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.