The Future of Contactless Payment and Curbside Pickup

  • January 11, 2023

  • Eyes4Research

Among the many revolutionary changes in consumer culture over the last several years, one that’s often overlooked is how people pay for their goods and receive them. As the technology revolution has changed how we work and live, it’s also changed how we pay for goods and services, with many people welcoming this change. The old way of paying for goods and services involved many hands-on steps, but the combination of the COVID-19 pandemic and advances in consumer technology have made contactless payment options on cards, smartphones, and payment apps, along with curbside pickup for goods, popular options. Successful brands have taken advantage of this trend and even as fears of COVID have subsided, brands that understand the popularity of the contactless trend are positioned for success.

Contactless payments refers to any payment option that eliminates or limits points of contact between the consumer and the business. The most popular contactless payment option is through credit and debit cards, but smartphones also have built in contactless payment options, such as Apple Pay and Google Pay, and there are also several third party contactless payment options – including PayPal and Cash App – that can be accessed on phones at the point of sale. Consumers have adopted contactless payment for a number of reasons, including cleanliness, convenience, and for many young people, it’s a way to stay current with tech trends

Somewhat separate from, although related to the contactless payment trend is the curbside pickup trend, or as it is commonly known – BIOPOIS – for “buy online pickup in store.” The BIOPOIS trend was also accelerated by the COVID-19 pandemic, and like contactless payment a large segment of the consumer population has readily accepted it for many of the same reasons, indicating that it will likely stay a part of the retail landscape for some time. Both of these trends present plenty of opportunities for brands to connect with new and existing customers, and for consumers to support their favorite brands in ways that are safe and convenient. So let’s see how these trends developed, the benefits they offer to brands and consumers, and their futures in the American retail landscape.

From Cashless to Contactless Payments

Although the concept of contactless payment is fairly new, cashless payments paved the way for this trend. Checks, money orders, and electronic transfers were all the first step toward contactless payments, but as paying by check and money order has been an option for quite some time, what changed? The answer to that may seem simple at first, but it’s actually multi-faceted.

The first factor that facilitated the transition from cashless to contactless payments, and the one that most people probably think of, is improvements in technology; but even this is somewhat complex because it involves many different improvements. Overall, technology is more reliable, secure, and faster, which has allowed electronic contactless payments to take place, but if there’s one particular technology that accelerated this process it was radio-frequency identity tech (RFID).

RFID technology utilizes electromagnetic fields to identify and track objects that have tags attached to them. Sony introduced the first RFID card in 2004 that could be used in credit cards or phones, giving the user the option to make a payment without having to hand his card to the teller or to swipe the card. Once RFID technology became a reality, it opened the door for a host of new technologies and apps.

By the late 2000s and early 2010s a host of mobile payments apps, including PayPal, Venmo, and Cash App, became commonly accepted, adding to trend. Google and Apple then followed with their own proprietary mobile payment apps and digital wallets, giving consumers even more options to make as little contact as possible at the point of sale. 

The final and perhaps the most important factor that has driven the contactless payment and curbside pickup trend has been the COVID-19 pandemic. Fear of catching and/or spreading COVID drove retailers to offer more contactless payment and curbside pickup options in 2020, which were readily accepted by a large segment of the population out of a perceived necessity

The evolution of curbside pickup followed a similar route as contactless payments, although its origins are decidedly more low tech. Pizza and other types of food delivery were the forerunners to curbside pickup, but as with contactless payments, the trend took on a new life when COVID-19 hit. But beyond the COVID pandemic, companies have utilized curbside pickup as another channel in the omnichannel marketing chain, allowing them to have more contact with consumers without having physical contact. So now that these trends have become part of the retail landscape in America, where will these trends go and what benefits do they hold for consumers?

The Future of Contactless Payments and Curbside Pickup 

The numbers indicate that as smartphone use increases globally, so will contactless payments. In 2021, the market size of mobile wallets was $6.2 billion globally, and that’s expected to increase at a compound annual growth rate of 27.4% from 2022 to 2030. Although the average American loves his or her smartphone, the numbers also show that the market adoption of mobile wallet use in the US in lagging behind Asia, which had a 30% revenue share of the market in 2021. The numbers show that there’s plenty of opportunity in the mobile wallet space in the US, so expect retailers to more aggressively push options. 

It should also be noted also that although Americans may be lagging behind Asians in the use of mobile wallets, they are whole heartedly accepting contactless credit cards. VISA estimated there would be more than 300 million contactless credit in the US alone, which was up from 100 million in 2019. As consumers react well and increasingly accept mobile wallets and contactless credit cards in great numbers, the adoption of curbside pickup will likely not be as notable, but it will be steady nonetheless.

There’s no doubt that the curbside pickup trend gained serious momentum during the COVID-19 pandemic. In September 2020, at the height of the pandemic, nearly 44% of US retailers offered the service, which was up 500% from two years prior. The numbers also show that the trend may be permanent and that it’s no longer being driven by the elderly, infirmed, or hypochondriacs. A study conducted by the Associated Press-NORC Center for Public Affairs Research and the SCAN Foundation found that 33% of young adults under the age of 50 who started using curbside pickup during the pandemic say they will continue to do so, citing convenience, safety, and increased spending discipline as reasons.

Taking a Hands-Off Approach

The numbers show that contactless payment options are growing, as more and more consumers learn and adopt these new technologies. Studies also show that curbside pickup is more than just an ephemeral trend, but is now a permanent part of the retail landscape. Both of these retail trends were brought about by a number of factors, but fear and new technology were the primary forces. As consumers have adopted these payment and pickup options and learned their benefits, it’s likely that even more innovations are on the horizon in the future, and brands that recognize this consumer trend and learn how to take advantage of it will be better positioned for success in the new retail landscape.