Contactless Payments May Make or Break Small Businesses, Visa Study Finds

Rethinking the point-of-sale experience may be essential for small businesses

Americans were slow to adopt contactless payments, but that changed during the pandemic. Visa

America has been slow to embrace contactless payments compared to the rest of the world. Outside of the U.S., contactless payments make up nearly 60% of face-to-face Visa transactions, but that number lags behind in the U.S. In the first month of the pandemic, however, there was a 150% year-over-year increase from March 2019 to March 2020 in contactless Visa payments.

With that in mind, Visa’s Olabisi Boyle, vice president of connected commerce, noted how the global debit and credit card payment organization has been prioritizing its marketing strategy to educate consumers on contactless payments, as well as small businesses on how best to pivot for success on the road to recovery.

As part of that effort, Visa has published a global small business and consumer insights study revealing how spending habits have rapidly evolved and how small businesses have been adapting to meet those demands, such as the preference for contactless payments and the boom of ecommerce.

Visa’s Back to Business Study found that nearly 8 in 10 consumers worldwide (Brazil, Canada, Germany, Hong Kong, Ireland, Singapore, the UAE and the U.S.) have changed the way they pay in order to reduce contact. In turn, to keep operations on track, 67% of small businesses have made shifts to digital commerce by launching ecommerce sites or by implementing touchless technology as part of their in-store checkout experience.

A Visa spokesperson told Adweek that the company is encouraged by the Back to Business study’s results, as it points to the resilience and optimism of small business owners. Even as many of them estimated at least six to 10 more challenging months before returning to “business as usual,” 75% were optimistic about the future.

Some programs that Visa has established to help small businesses adapt to contactless payment technology include the creation of Back to Business street teams and virtual street teams to educate merchants on their options for point-of-sale materials, and the IFundWomen grant program for U.S-based Black women-owned small businesses.

How important is it for small businesses to reduce in-store contact by introducing new ways to pay and shop? The study found that in the United States, contactless payment systems could make or break a small business—54% of American consumers surveyed reported that they would switch to a new store that installed contactless payment systems, with 33% using contactless payment whenever possible.

These demands for contactless payment options are similar worldwide—46% of global consumers indicated that contactless payments are among the most important safety measures, and another 48% said they would not shop at a store that only offers payment methods that require contact with a cashier or a shared device.

Visa has seen the benefits of making contactless payments a key part of a business’s Covid-19 safety strategy with Dunkin’. “We’ve worked closely with the national retailer,” the spokesperson said, “and the percentage of Dunkin’s in-store Visa transactions that occur with a tap of a card or mobile wallet has grown over 120% from June 2019 to June 2020.”

Among the changes small businesses have made during the pandemic:

  • 23% have targeted advertising on social media
  • 20% have offered alternative payment solutions
  • 18% have applied for business loans

When it comes to shifting their business online or increasing their online presence, small business owners in the US are most concerned about the cost to invest in digital infrastructure (30%), data privacy and security (28%), less personal connection with customers (28%).

An area that still needs improvement? Where consumers choose to shop. Although the study reports that 57% of Americans say the top reason to shop local is to support the local economy, only 9% of global consumers surveyed shop exclusively at locally owned businesses.

“We expect each of these numbers will climb not only as more SMBs are forced to close their brick-and-mortar doors, but as millennials—who are much more willing to work digitally—begin to more heavily infiltrate the SMB landscape,” the spokesperson said.

Visa also expects small businesses will take security more seriously than ever before—more than half of the study’s global respondents (53%) indicated that they would be likely to purchase a fraud management solution to safeguard data privacy and security.

@monicroqueta Mónica is a breaking news reporter at Adweek.