Payment industry innovators have been working toward digital-first payment alternatives for more than two decades now, and COVID-19 merely created a perfect storm for contactless solutions to thrive.
COVID-19 created the conditions for a larger audience to see the value in the options that were already at hand for many—like contactless cards and mobile wallets. A study by The Strawhecker Group and the Electronic Transactions Association showed that 27 percent of small business survey respondents have seen an increase in mobile wallet and contactless card payments since the start of the pandemic.
COVID-19 also created the conditions for exponential growth in the contactless market. “The global contactless payment market size is expected to grow from USD 10.3 billion in 2020 to USD 18 billion by 2025, at a Compound Annual Growth Rate (CAGR) of 11.7 percent during the forecast period,” according to recent research. Plus, over a million smartphone users worldwide used mobile payments in 2020 compared to just 830,000 in 2018. That number is forecasted to increase to 1.31 million by 2023.
Contactless is adopted across the world. In an interview with Hewlett Packard Enterprise (HPE), Omer Cheema, director of strategy at Samsung, said, "More than 50 percent of the transactions in Europe are being done contactlessly." And in Germany, more than half of purchases are taking place contactlessly, compared to 35 percent pre-COVID. No other country can compete with China, though—81 percent of smartphone users use mobile payments, according to eMarketer.
Previous to the pandemic, once a consumer passed a certain spend limit on a contactless payment, they’d have to tap in their pin number. But because of the amount of germs that are transferred via touch, according to Hewlett Packard Enterprise, “48 countries have increased spending limits on contactless payments. For example, the U.K.'s spending limit went from £30 (US$36.60) to £45 (US$54.90), while Canada's leapt from CAD$100 (US$71.50) to CAD$250 (US$179.20).”