Americans Have Been Slow to Embrace Contactless Payments. Coronavirus Will Change That

It was seen as a major innovation for the MTA, the first update to its payment system—which, until then, had relied entirely on flimsy MetroCards—in 25 years.

For other major metropolises, moving to contactless was old news. London’s Underground system adopted contactless payments systemwide (not just a select part of three lines) in 2014. And while London’s system, which allows riders to tap on with their credit card or digital wallet alone, other cities have embraced contactless in other ways: Paris has incorporated a contactless system with its Navigo card, for example, and in Tokyo, there’s an app that allows for on-phone payment for the subway.

When it comes to payment technologies, the United States has often lagged behind much of the world, particularly as the technology pertains to credit cards—and not just on public transportation. Nearly 60% of all face-to-face Visa transactions made in countries other than the U.S. are contactless, and the overall number of these payments grew 40% from 2019 to 2020. In a global consumer survey from Mastercard, eight in 10 respondents said they use contactless payments.

“In every store [in the Netherlands], you can pay contactless,” said Roderick de Koning, CEO at Ginger, a payments-as-a-service company based in Amsterdam. “There isn’t one store where you can’t.”

There is no doubt contactless is catching on in the U.S. Between March 2019 and March 2020, contactless payments grew by 150%, a number a spokesperson for Visa called “staggering.” And nine of the top 10 American credit card issuers are introducing contactless cards. But the U.S. is behind many countries in Europe and Asia, as well as Australia, where contactless has become the default method of payment for many consumers.

But in the United States, where staying six feet apart has become the new standard, contactless isn’t just cutting-edge; it’s necessary. It’s difficult to imagine a time—in the near future, anyway—when people will feel comfortable handing their credit cards to servers or retail clerks.

That means embracing contactless, which likely would have been slowly but steadily increasing now, will have to happen more quickly. And as stores, restaurants and other merchants begin to open their doors again, contactless provides businesses with a powerful tool, one that will help create the sense of comfort consumers are seeking in the reopening process.

“Everyone—banks, technology, companies, retailers—they all stand to benefit,” brand consultant David Deal said. “Any change that brings more people into brick-and-mortar stores to make purchases is going to benefit everybody who gets a piece of that revenue.”

Why the U.S. has lagged behind

There are a few reasons for the U.S.’s reluctance to fully embrace contactless and why it is typically slower to adopt the latest in payment technologies.

The first comes down to the size and scale of the American financial industry, according to de Koning. While smaller European countries like the Netherlands have a few centralized banks that count nearly all of their citizens as customers, the U.S. has its giants, such as JPMorgan Chase, Bank of America and Wells Fargo, but plenty of smaller institutions, too. As of the end of 2019, there were 5,177 commercial banks in the U.S., according to the Federal Deposit Insurance Corporation.

Rolling out new technology at a few major institutions is a much simpler task than doing so across thousands, particularly when that number comprises mostly smaller banks that don’t have the same resources as the financial giants.

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