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The accelerated transition to cashless

Contactless booms across Europe as habits change

By Wirecard Editorial Team

The use of contactless mobile payments in Europe is growing steadily. The past few years have seen a rollout of millions of contactless cards, as well as an increase in contactless-capable point of sale devices, with these being adopted by retailers and large public institutions like the London underground network. A new piece of pan-European research commissioned by Wirecard and conducted by YouGov provides a snapshot of contactless payments uptake today and reveals the extent to which the current Coronavirus health pandemic is accelerating our transition towards cashless.

Where we were before the pandemic

The convenience of a simple contactless bank card combined with a rise in retailers that accept contactless payments have driven a change in habits over the past years. And uptake has been significant in Europe. Among the three countries surveyed, adoption of contactless payments was most widespread in the UK, a country which is arguably steadily moving towards a mostly cashless society. The research shows that 91% of respondents in the UK indicated they had used contactless payments (which involves holding a smartphone, debit card or credit card to a card reader, without inserting the card or entering a PIN) at some point in the past. This proportion was 86% in France and 63% in Germany.

Source: Wirecard Contactless Payment Survey

Mobile payments still catching up

While the portion of consumers who have downloaded a smart wallet onto their phones is high, regular use of mobile payments is still not as popular as the use of the more familiar card, showing there is considerable potential here. When asked how respondents pay when using contactless, the portion of consumers who indicated their smartphone is their most common payment method was 6% in France, 7% in Germany and 10% in the UK. However, young people in the UK are already ahead of the game: they are nearly 3x as likely to pay with their smartphone than with a card. And as mobile payments and wallets become more widespread, there is little doubt that they will continue to grow in popularity.

The global health crisis is changing payment habits

We are seeing a wave of change across the payments industry, accelerating a transition towards cashless. The research reveals that, as more people are aware of the risks of exchanging cash and touching credit-card terminals, the technology is now thundering into the mainstream across Europe.

Source: Wirecard Contactless Payment Survey

In all three countries surveyed, more than half of respondents (63% in France, 52% in Germany and 56% in the UK) indicated that they now use contactless payment methods more frequently than before the Covid-19 crisis. And why? Due to the risk of infection and to help contain the virus. This illustrates a significant change in habits and it is easy to understand the reason. Even with retailers going to extra lengths to restrict the spread of the virus, such as limiting the number of shoppers allowed into their stores at any one time and more regular store cleaning, considerable risks are still present when exchanging cash or touching payment keypads.

Sticky habits

While the global pandemic will eventually recede, appetite for contactless payments will not. Changes we have made as a result of avoiding contamination and or whilst living in lockdown are likely to remain with us, well into the future. Jordan McKee, an analyst at 451 Research, agrees: “It’s behavior that’s going to stick after stay at home ends. There will be muscle memory about paying, and consumers will use it going around their daily life.” The YouGov research also supports this claim. In France an impressive 83% of respondents reported that they will continue their more frequent use of contactless payments after the pandemic, while this proportion was 74% in Germany and 77% in the UK.

While improved hygiene is a leading driver in changing habits during the Coronavirus pandemic, the primary reason consumers will continue to use contactless payments over the longer-term is speed, as reported by seven in every ten respondents in France (71%) and by eight in ten respondents in Germany and the UK (79% and 80% respectively).

It appears that Covid-19 will be the unlikely catalyst for technological change in Europe, driving our transition towards cashless payments faster than anyone could have predicted.

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