How COVID-19 Changed the Payments Industry
It’s no secret that the pandemic has altered almost every aspect of our lives. Today, we’d like to discuss a few of the major changes that have occurred in the payments industry and whether or not they will remain even after the pandemic is over.
The Decline of Cash Payments
In the past few years, many American consumers have started to largely phase out cash payments from their lives, in favor of credit card payments. However, the pandemic has accelerated this transition like no other event in American history. According to a study from the Pew Research Center, 34% of American adults under the age of 50 say they don’t make any cash purchases throughout the week. The younger generations have definitely led the transition from cash to digital payments but from this statistic, it’s obvious that cashless payments are popular among a variety of age groups.
The Future of Payments is Contactless
Unlike other countries, the adoption of contactless payment technology in the United States has been incredibly slow. According to a 2018 study from A.T. Kearney, America was lagging significantly behind countries like the United Kingdom and South in terms of the utilization of contactless credit cards. In the year of the study, approximately 3% of American cards were contactless, versus 64% in the United Kingdom and a staggering 96% in South Korea.
Fast forward to 2021, contactless payments have seen a dramatic increase in popularity throughout the United States. Due to hygiene concerns associated with the COVID-19 pandemic, contactless payments are at an all-time high and they don’t seem to be going anywhere anytime soon. Since March 2019, the number of contactless payment transactions increased by 150%, and as the pandemic drags on, this number will continue to grow. In order for businesses to stay profitable right now, it’s imperative they utilize a payment device that allows for effortless contactless payments. If you’re interested in learning which device will work best for your business, please reach out to us.
Are These Changes Permanent?
Although we can only speculate at this point, we strongly believe that these changes to the payments industry will remain even after the pandemic is over. Why? Here are just a few reasons:
- Contactless payments are more hygienic than cash payments and they can help prevent the spread of germs.
- In the beginning, many of us were wary of completing a transaction without swiping our card or scanning our chip, but over the past year, many consumers have grown accustomed to contactless payments.
- The United States was already headed in the direction of a cashless society and the pandemic has just accelerated the adoption of contactless payments. Due to the health concerns associated with cash payments, 2020 was probably experienced three to five years’ worth of progress in terms of technology adoption.
Is your business interested in learning more about payment solutions built for the pandemic? Please contact us today and one of our Relationship Bankers will be happy to assist you!
The views, information, or opinions expressed in this article are solely those of the author and do not necessarily represent the views of Citizens State Bank and its affiliates, and Citizens State Bank is not responsible for and does not verify the accuracy of any information contained in this article or items hyperlinked within. This is for informational purposes and is no way intended to provide legal advice.