The onset of the novel coronavirus has caused a seismic shift in the daily lives of Americans. While recent data in the fight against this pandemic are encouraging, we’re not out of the woods yet, and we will be slow to return to life as we once knew it. Social distancing, working from home, and a shift to online shopping will likely continue. Small businesses are turning to curbside delivery, grocery services are offering pick-up or delivery, and retailers are heavily reliant on online purchases.
But as consumers begin to shift back to making purchases in person, protecting their health will be paramount. Luckily, the financial institutions that support the electronic payments system made investments long before this crisis that will help keep people safe and their funds secure.
One example is contactless payments, which allow for a customer to pay by simply waving or tapping her card or phone at a point-of-sale terminal, allowing for a secure, contactless transfer of funds, with no need for employee contact. As a restaurant owner in New York recently put it, “Nobody wants to touch cash anymore. The less contact, the better. Cash is filthy.”
Merchants also spend much more time and money on counting, auditing, and depositing cash than they do on electronic payments. In short, it’s more cost-efficient and better to use electronic payments.
Consumers see the benefits. According to data from Verisk Financial, contactless transactions in the United States are estimated to increase 256% in 2020, growing to an estimated 4.9 billion transactions. Verisk estimates this will almost double by 2021. And these projections were made before the pandemic, so the real acceleration in contactless payments could be enormous.
Verisk also estimates at least half of credit and debit cards will have contactless technology by mid-2021. This will make it easier for people to buy from merchants in a safe manner. Merchants keep approximately 98% of the revenue from every sale paid with a credit card, and don’t have to pay interchange fees unless a sale is made.
Financial institutions aren’t just innovating in how we pay. They’ve also invested millions in artificial intelligence and other security features to better detect and stop fraud. Criminals are currently preying on vulnerable populations right now through schemes that ask for credit card information. Thankfully, there is technology already deployed to detect unusual patterns and flag it for companies and consumers alike.
As this public-health crisis continues, financial institutions like community banks and credit unions, as well as card networks, will continue to work to protect consumers and make it easy and safe to buy and sell goods. Our livelihoods depend on it.
—Jeff Tassey is chairman of the board of the Electronic Payments Coalition, Washington, D.C.