When the pandemic struck in March, physical cash came under fire for being a potential spreader of coronavirus. As a result, many retailers started to encourage shoppers to pay using plastic, with some banning cash altogether.
This, together with rising concerns over physical contact and contagions, has led to a huge drop in cash utilisation, finds a US consumer survey from 451 Research cited by Forbes.
Over two in five shoppers aren’t using physical money as often as they were since the outbreak. The drop is greatest among consumers with household incomes of over $150,000 (£114,850) per annum and in the Gen X demographic (aged between 38 and 53), where a respective 64% and 54% have decreased their use of cash.
The reason why cash use is dropping is because shoppers are consciously and subconsciously looking to meet three key priorities whilst they’re in a store:
- Limit what they come into contact with (for instance cash and point-of-sale terminals)
- Reduce the time they spend in close proximity to other people (including cashiers)
- Avoid scenarios that increase overall time spent shopping (for instance queues and waiting for change)
Contactless payments resolve each of these concerns at the till point by allowing a more efficient and sanitary payment experience.
Use and adoption of cashless payments on the up
The survey highlighted that the pandemic has led to two main contactless trends. The first is user activation; shoppers who didn’t have a reason to use contactless before have been inspired to give it a go, potentially due to hygiene reasons. Over one in six survey respondents admitted to making their first ever contactless payment during the pandemic.
Net-new contactless adoption was greatest for Gen Z (25%) and Millennials (23%), though one in ten Baby Boomers also tapped to pay for the first time this year.
Increased utilisation is the second trend. Almost one in three (29%) shoppers said they have used contactless payments more since the outbreak of Covid-19, with the greatest increases among Millennials (40%) and Gen X (39%).
The question is whether shoppers will carry on using contactless payments when the virus finally retreats. An overwhelming majority (86%) of first-time contactless payment shoppers say they plan to continue making payments in this way. Statistics like this point to the potential for continuing cash displacement and highlight the importance of contactless as a top-of-wallet factor and volume driver for card providers.
It really goes without saying that retailers must make sure contactless payment is an option within their stores – or else, they risk alienating shoppers. They should also advertise the fact they welcome cashless payments and other steps they are taking to keep their stores a safe place to shop.
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