- Thierry Spanjaard
Towards a contactless world
Our industry is full of bright characters who build strategies to develop new products and services and propose them for market adoption. In the complex ecosystem of the secure transactions industry, these strategies are based on a combination of R&D, marketing plans, standardization, influence, communication associated with programs including field tests, trials, implementation and generalization.
Our industry history has already some records of technologies that have been developed, proposed to the market for long with extensive marketing efforts from the whole industry and that did not take off as fast as we anticipated.
And then, sometimes, events that are totally beyond our control constitute the trigger that creates a tipping point in the adoption curve. The first of these events that comes up to our mind is 9/11: the industry had been proposing to secure ID documents with chips for long, but governments were dragging their feet until September 11 made them realize they needed to have a worldwide secure ID infrastructure. This has led to the ePassport and eID industry as we know it now.
Similarly, the evolution from contact to contactless payment cards, actually dual-interface cards, was on a permanently growing trend though it was somewhat slower than the anticipations of our industry strategists. The COVID-19 crisis has led the whole world to rethink their daily interactions with others and with devices that seemed harmless until early 2020. All of a sudden, due to the ongoing health crisis, consumers no longer wanted to touch a payment terminal and were the most demanding group in the ecosystem for a switch to more contactless transactions.
Mastercard global consumer survey found that, citing safety and cleanliness, 79% of people worldwide and 91% in the Asia Pacific said they are now using tap-and-go payments. Globally, 46% of respondents have swapped their top-of-wallet card for one that offers contactless; in Asia Pacific, 51% of people have made the swap. COVID-19 has increased concerns about cash usage and led to positive perceptions about contactless due to the safety and peace of mind it provides. The majority of respondents (82 %) globally view contactless as the cleaner way to pay.
Germans were known, so far, for making more cash transactions than other Europeans. The ongoing health crisis has pushed many German consumers to change their habits from cash to contactless cards. Now, more than half of payments are currently being made by card are contactless, compared with 35% before the coronavirus crisis hit according to the German Credit Agency. In Germany, the PIN is required for transactions over EUR 25. The trend was already slowing evolved as 2019 was the first year in Germany where more payments were made with card than with cash.
Mastercard announced commitments to increase contactless payment limits in more than 50 countries worldwide in Europe, the Middle East, Africa, Asia Pacific, Canada, Latin America and the Caribbean. The financial services industry worldwide is demonstrating its efficiency in responding to this new paradigm.
For instance, in France, the GIE Cartes Bancaires, with the support of the community of card issuers, POS terminal vendors and merchants has been able to make the installed base of terminals and cards switch from a EUR 30 to a EUR 50 contactless threshold in three weeks while more than two years had been needed for the previous threshold update, from EUR 20 to EUR 30. Both the GIE CB and merchants communicate now on the fact that paying in contactless mode is one the social distancing gestures essential in stopping the pandemic.