Is retail’s contactless future here now?

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Jul 17, 2020
Matthew Stern

Germs are top-of-mind worldwide thanks to the novel coronavirus pandemic and many people are looking to limit physical contact with potentially contaminated surfaces. Those, in a nutshell, are the factors speeding adoption of contactless technologies.

Multiple studies point to an increase in the use of contactless payment solutions, like credit cards and digital wallets, due the pandemic. PYMNTS reports that a Visa study found a 150 percent increase in the use of such technology between March 2019 and 2020. Another study cited in the article found 30 percent of consumers tried contactless cards or smartphones to pay for a purchase for the first time during the pandemic. A significant portion cited as the reason fears of contracting the virus from touching cash or POS terminals.

Retailers where interfaces such as touchscreens once played a central role are working to add contactless elements to the in-store experience.

Experiential retailer Showfields launched its Magic Wand app, which lets visitors point their phones at displays and products to get more information rather than having to interact directly with the product, reports Glossy. Visitors can also add items to a virtual cart while in the store before checking out via its app.

These changes are not just catching on at retail — the perceived advantages of going contactless are altering the infrastructure of some cities. In New York City, a contactless payment system for riding the subway is now live in every train station in The Bronx, according to the New York Post. Riders can use mobile wallets and contact-free credit cards to pay. The Metropolitan Transit Authority (MTA) plans to have its entire bus fleet fitted with the solution by the end of the year, with some train lines in Brooklyn also going contactless.

Early on in the pandemic, experts feared that transmission via touching fomites (contaminated surfaces) represented a significant form of spread for the novel coronavirus. By mid-June, however, the consensus had shifted, with experts cited in The Wall Street Journal pointing to indoor personal interactions as the primary form of transmission.

The Centers for Disease Control and Prevention (CDC) still considers fomite transmission of COVID-19 as possible and continues to recommend hand hygiene as an important part of prophylaxis for the virus and many other contagious diseases.

DISCUSSION QUESTIONS: Do you see contactless payment and other contactless tools becoming a significant part of the retail experience? How can retailers that have come to depend on touchscreen kiosks and similar technologies make the shift with the least amount of headaches?

Please practice The RetailWire Golden Rule when submitting your comments.
"Yes, contactless transactions will surge due to consumers’ hand hygiene vigilance."
"The shift began even before the pandemic — the pandemic simply put it in hyperdrive."
"Contactless technology obviously will be used more broadly than only retail as people adopt new ways of being contactless and more digital."

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18 Comments on "Is retail’s contactless future here now?"

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Suresh Chaganti

I personally love it. Making credit card payments with a contactless chip feels magical. I think it certainly improves customer experience and with the pandemic, the need and adoption is only going to increase.

David Naumann

The pandemic has changed many customer behaviors and the increase in contactless payments is one of many examples. Just as the pandemic boosted online grocery and curbside pickup, we are seeing more consumers opt for anything that is contactless or limits their exposure to sales associates. Another good example is the increased use of mobile apps in restaurants for viewing menus, ordering and paying. I recently dined at a restaurant where the server held a plastic-coated menu with a QR code for me to scan to view the menu as an alternative to having guests touch menus. When our meal was done the server brought the receipt which also had a QR code for me to scan and pay for the meal. In addition to providing a contactless experience it also increases the security of payment card information.

Bob Amster

Contactless technology, at least in the payments segment of retail, has been faster and more secure than any other form — and mysteriously under-deployed. Contactless payment will undoubtedly get the boost it has needed and become the norm in most retail and near-retail establishments (think parking garages). For things such as product detail information and dressing rooms other forms of contactless are already available but, again, relatively under-deployed. When fully deployed, I believe they will be fully used.

Lee Kent

Yes Bob, I think this has been just the catalyst to get those reluctant, on board. The technology is there, easy and safe. For my 2 cents.

Ryan Grogman

I absolutely agree that contactless solutions are becoming a significant part of the retail experience. Like many other consumer services, the pandemic has greatly accelerated their demand and adoption. Self-service retail had already seen growth in recent years and the perceived and real benefits will cement its position moving forward. The growing demand has driven a multitude of technology solution options as well, thereby lowering the costs for retailers to procure. However, like all new technologies, the biggest challenge lies in developing the right set of business and support processes so that it delivers a positive customer experience rather than simply introducing new technology for the sake of technology.

Andrew Blatherwick

I have not used any cash since March and I’m sure many other people will say the same. Retailers have found it easier and have used the pandemic to force customers to use the “new” technology. It is not new but for many using it on a regular basis has become a habit and that is new. Retailers will welcome this as handling money has always been a cost they could do without. They get their money into the bank faster, there is less cost of cashing up in stores and banking. The only risk now is that fraudsters are likely to target this as a way of creating revenue. It is not as easy as other types of fraud so hopefully it will not be a big problem but it will be a factor to watch out for. Cashless is now safer for everyone, better for retailers and, as people become used to it, easier for the consumer too.

Lisa Goller

Yes, contactless transactions will surge due to consumers’ hand hygiene vigilance. Cash is no longer king. As an Oxford University study found, the average bank note contains 26,000 bacteria colonies. Gross.

To boost efficiency and mitigate risks associated with high-touch surfaces, more retailers will invest in one-tap credit card transactions, QR codes and digital pay. Even before the pandemic, retail leaders like Lululemon, Starbucks and Amazon Go encouraged contactless innovation for a faster customer experience.

Ricardo Belmar

Consumers have discovered how convenient contactless payments are during the pandemic and we can expect this to be one habit with strong lasting power. It’s faster, secure, and exudes convenience in a world where convenience is still king for the consumer. The pandemic has simply accelerated adoption for this technology and it is here to stay. Although the science may be shifting away from surfaces driving infection of the coronavirus in this pandemic, consumers have become more health and germ conscious than ever before so touching surfaces in retail environments has a different connotation for most consumers now. Will this be the end of touchscreens in retail? In the near-term, yes, I see this issue remaining, but I expect surface treatments will convince consumers to start using them again. However that won’t change how convenient consumers find contactless payments.

Jeff Weidauer

Contactless payment has been available for several years, but retailers have been slow to offer it because the investment offered little upside for them in terms of data capture or labor savings. But consumer demand is now making contactless the method of choice, and it will quickly switch from a point of difference to an expectation.

Ralph Jacobson

There is no question that this pandemic has created new habits (as well as opportunities) for shoppers, brands and retailers that may last well beyond the passing of the crisis once a vaccine is developed. So must all retailers immediately make the costly switch to contactless transactions (including POS equipment, fixturing, process changes, etc.)? I don’t believe so. Sure shoppers may appreciate the investment however, if the funds are not currently in the budget, you may want to explore a phased-in implementation.

Brian Cluster

Contactless payment is here to stay. In my own personal experience, the apps as well as the chip cards have been very successful to use for consumers as I rarely see any complications at checkout. To build on what David Naumann said about QR codes, we are seeing a resurgence of these codes which honestly many said would really not catch on a few years ago. Contactless technology obviously will be used more broadly than only retail as people adopt new ways of being contactless and more digital. Something as simple as handing a new contact a business card now seems awkward but, fortunately, you can use the Linkedin QR code for an initial one-on-one exchange of information.

These next few months will be critical for retail companies in terms of ensuring consumers that they’re protected, so they need to engage in constant communication with their customers when it comes to staying healthy. There are new technologies designed specifically to address issues of contamination of touchscreens, with specially treated glasses that kill germs and viruses. By deploying them now, retailers can give shoppers the peace of mind needed get them into the stores and keep them coming back.

Gregory Osborne

The shift began even before the pandemic — the pandemic simply put it in hyperdrive. With cost savings from self-checkout, and the improved consumer experience (only in some cases), contactless tools will continue to become more widely used even after the pandemic.

Ananda Chakravarty

On the payment side, the U.S. has been late to the game and we’ll see faster adoption of contactless payments due to COVID-19, because of these factors:

  • More retailer adoption;
  • Easing restrictions by finance;
  • Customer behavior changes.

More specifically, retailers are adopting NFC enabled card payments, almost 99 percent of the top 200 retailers are contactless-enabled.

Financial networks are expanding contactless including new policies such as less signature capture and higher spend thresholds.

Lastly, consumers are seeking hygiene-friendly environments in retail. Approx. 87 percent of U.S. shoppers prefer to shop in stores with touchless or robust self-checkout options.

Contactless payment has already been growing and retailers in countries like the U.K. operate ~70 percent of stores and ~40 percent of card transactions using contactless. In the U.S., many major retailers and QSRs have adopted contactless including McDonald’s, Dunkin’, CVS, Publix, Walmart and Target and a host of others. Even before COVID-19, contactless was poised to grow at almost 20 percent CAGR.

COVID-19 has only accelerated this growth — expect to see more contactless going forward.

Ken Morris

The need for contactless transacting goes far beyond a touch-free experience at checkout, it also includes the reduction of physical interaction with on-shelf products. Technologies such as QR codes and near-field communication (NFC) can be utilized for product information to minimize physical interactions in the store and avoid touch-screen kiosks.

Self-scan and go apps were gaining traction before the pandemic, as consumers appreciate the convenience of scanning items from the operator’s app on their phone. By self-scanning and paying via credit card on file, the consumer avoids waiting in checkout lines, avoids touching almost everything and it enables them to ensure all items were recorded at the right price. The adoption of self-scan and go may accelerate as it offers consumers the benefit of less contact with store associates.

Perry Kramer
Contactless payments will see its biggest expansion over the next 12 months in the US since its introduction. There was a lot of hype when Apple Pay was first introduced and then delays due to many factors including retailers’ slow adoption, which was the largest impediment. COVID-19 was clearly a tipping point from a consumer demand and use of mobile wallets and contactless cards. The pandemic, combined with many other contributing factors, will lead to rapid upturn in use and adoption this year: Starting this spring, many of the major credit/debit card-issuing banks are making a major push to issue contactless cards. In the past, they were reluctant to spend the extra money to issue cards with contactless technology or were waiting for the normal reissue cycle driven by card expiration; Most retailers implemented contactless technology software/hardware when they did their EMV upgrade over the last couple of years; The upgrade of the fuel dispensers for EMV, which has been delayed to spring of 2021, will enable both contactless cards and mobile wallets at the… Read more »
Brian Numainville

Yes, the pandemic dramatically accelerated what was already gradually happening. By the time we are to the “next normal,” contactless payment and other tools will become just another part of the experience.

Rachelle King

This is inevitable. Contactless payments are the future. How fast or how slow retailers will move is the question. However, for those retailers with contactless payment methods sitting dormant in their apps because consumer adoption has been slow, this is a good opportunity to redirect consumers to this safe-shopping benefit already waiting (e.g. Walmart Pay) and potentially boost app usage as well.

For retailers needing to start somewhere, a contactless payment method built into your app may inspire more app engagement. Consider this an opportunity within an opportunity.

"Yes, contactless transactions will surge due to consumers’ hand hygiene vigilance."
"The shift began even before the pandemic — the pandemic simply put it in hyperdrive."
"Contactless technology obviously will be used more broadly than only retail as people adopt new ways of being contactless and more digital."

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