Contactless Payments Ubiquitous in China, Struggle to Take Hold in the West
Contactless payments and digital wallets are ubiquitous in China but have been much slower to catch on in the West, according to Strategy Analytics. The pandemic has made contactless payments more attractive to consumers, but the lack of physical points-of-sale available to use has inhibited growth.
Online growth surged during 2020 due to COVID restrictions and while this should have increased consumer interest in digital wallets, contactless payments have still struggled to take hold in the West. Strategy Analytics surveyed consumers in China, the US, and the UK regarding their usage of contactless payments, their interest in digital wallets, their prioritization of digital wallet features, and the importance of specific incentives when applying for a new credit card. After the pandemic, consumers in the West will be somewhat more likely to adopt contactless payments, but there is still a long way to go before it becomes the preferred payment method across all regions.
“Everyone in China routinely use contactless payments, even the older generations. Chinese respondents over the age of 55 reported greater use of contactless payments than ANY age group in the US and UK. Comparatively, the use of contactless payments in the US and UK is overwhelmingly confined to respondents of less than 45 years of age. In these regions, older consumers are more likely to say they do not have, or do not know if they have, the capability to make contactless payments on their smartphone,” said Chris Schreiner, report author and director of syndicated UX research at Strategy Analytics.“Combining additional features like peer-to-peer payments will result in more early adopters and younger consumer adopting digital wallets, but these are also the same ones who are already expressing the greatest interest.”
“To appeal to older consumers, there are several things that need to occur, including better communication that these options exist, better education to show the benefits of digital wallets and better incentives – over and above what traditional credit cards offer – to spur interest. The entire payment experience needs to be contactless and that includes steps at physical points-of-sale, which in the US should also incorporate tipping and providing signatures,” added Kevin Nolan, vice president of UX innovation practice at Strategy Analytics.