Surge in contactless payments amid E-Commerce boom

The rise of contactless payments

Sofia Karpova

2020-11-18 19:37

Digital commerce leapt forward

The COVID-19 pandemic catalyzed unprecedented growth in e-commerce and the adoption of contactless payments throughout 2020, as consumers worldwide shifted towards online shopping and digital transactions in response to health concerns and lockdown measures. This surge not only highlighted the convenience and efficiency of digital commerce but also indicated a significant transformation in consumer behavior and payment methodologies.

Explosive growth in E-Commerce platforms

Online retail platforms like Amazon and Shopify experienced explosive growth, with Shopify reporting a 76% increase in sales from 2019, and Amazon's profits in the second quarter of 2020 nearly doubling year-over-year. This boom was driven by an increased consumer preference for shopping online, from daily necessities and home essentials to entertainment and luxury goods. The pandemic effectively compressed years of e-commerce growth into a few months, rapidly expanding the customer base and firmly establishing online shopping as a mainstay in retail.

The rise of contactless payments

Concurrently, contactless payments saw a significant uptick in usage. Driven by the desire to minimize physical contact at points of sale, consumers and businesses alike adopted tap-and-go credit cards and mobile payment systems such as Apple Pay, Google Pay, and Samsung Pay more broadly than ever before. Financial institutions reported a surge in contactless transactions, and many retailers upgraded their systems to accept these forms of payments, promoting a faster, safer, and cleaner method to conduct everyday transactions.

Shifting consumer habits and retailer adaptations

The shift towards digital commerce and reduced reliance on cash has been stark. Retailers across the globe have had to adapt rapidly to these changing consumer preferences by enhancing their online presence, optimizing digital payment methods, and often, completely overhauling their logistical and supply chain strategies. These adaptations were not just limited to large corporations but were equally critical for small and medium-sized enterprises striving to survive and compete in a drastically altered market environment.

Long-term implications for the retail and financial industries

This pivot to e-commerce and contactless payments is expected to have long-term implications for the retail and financial sectors. Retailers will likely continue investing in digital technologies and e-commerce platforms to cater to the new normal, while financial service providers might accelerate the development of more sophisticated digital payment solutions. Moreover, this shift is prompting policymakers and regulators to reevaluate and potentially revamp regulations governing digital transactions and data security.

A paradigm shift in commerce

The substantial rise in e-commerce and contactless payment practices in 2020 did more than just respond to a temporary crisis; it marked a paradigm shift in how commerce is conducted and experienced globally. As businesses and consumers increasingly favor digital and contactless solutions, the landscape of retail and financial transactions is set to evolve continually. The pandemic has undeniably propelled society into a more digital future, with innovations adopted during this period likely to persist and expand even further as the world gradually moves towards recovery.