Mobile payments at the point of sale (POS) had historically been held back in the West by a lack of push factors away from cards. COVID-19 has provided that push factor, and now mobile payments have a huge growth opportunity.
Generally, consumers were already moving towards mobile payments at the POS, but mass adoption had been limited to markets without strong existing card usage habits. These habits had proven difficult to break until the COVID-19 pandemic. As consumers in lockdown are getting used to a more digital life, mobile wallet usage has surged across virtually every corner of the globe, both online and offline as a means of avoiding disease vectors when paying in-store.
In payments at the physical POS specifically, consumers are avoiding cash as a potential disease vector and moving to electronic payment tools. Contactless card usage has also been steadily growing, since they allow consumers to minimise exposure to disease vectors, and card companies are capitalising by raising maximum spending limits without requiring PIN authentication.
However, mobile offers consumers even less risk, since transactions above the contactless limit can be authenticated in the mobile wallet app rather than on the merchant’s PIN pad. COVID-19 thus provides the push factor away from both cards and cash that mobile payments need to drive adoption.
We are already starting to see the shift to mobile. CBA Bank in Australia, for example, is reporting digital wallet users spending a record $1bn in transactions for the month of March in 2020. This represents a 17% increase since last year. This growth was already happening in the country since Apple Pay was introduced last year but COVID-19 is proving to be a catalyst for its acceleration.
The current crisis will definitely encourage consumers to actively use their mobile phone at the physical POS – and that habit, once ingrained, will bolster mobile payments in the long term. Payment behaviour is changing at a very fast pace during these times and convenient digital methods are the obvious winners.