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Monday, November 15, 2021

Shopping changes are here to stay

Changes in consumer shopping and payment habits, ushered in by the Covid-19 pandemic, are here to stay. "Upwards of 80 percent of the shift to digital will be permanent," said Emilie Kroner, senior vice president, retail and commerce at Mastercard.

Kroner's remark, based on Mastercard research, came during a Nov. 3 briefing by Mastercard and the Food Marketing Institute. FMI data released during the briefing shows that about 14 percent of American consumers shop for their groceries online every week; 61 percent purchase groceries online at least occasionally.

According to Steve Markenson, director of research and insights at FMI, the online share of grocery spend has grown significantly since the start of the pandemic, rising from 15 percent in February 2020 to 22 percent in October 2021. "Grocers need to continue to monitor and adjust to changing shopping preferences," Kroner said.

Four in five Americans go digital

It's not just grocers that need to get on the digital bandwagon, either. A new report from the consultancy McKinsey & Co. revealed that more than four in five Americans have used some form of digital payment this year.

McKinsey defines digital payments to include browser-based or in-app online purchases, in-store checkout using a mobile phone and/or QR code, and person-to-person payments, such as Venmo or Zelle. The data from McKinsey's 2021 Digital Payments Consumer Survey—its seventh yearly installment—exceeds the 78 percent who said they made digital payments in 2020 and 72 percent in 2017.

"Some shifts in digital adoption during 2020 and 2021 appear to be related to the Covid-19 pandemic, and my prove to be transitory," McKinsey stated. For example, online payments grew the fastest, up 12 percentage points in 2021, likely because more people were stuck at home and forced to shop remotely. On the other hand, in-app payments were a mixed bag, as staying at home depressed ride-share usage while boosting home food deliveries.

Consumers embrace contactless; merchants not as much

Meanwhile, a new study from gateway provider NMI points to skyrocketing adoption of contactless payments. In the United States alone, contactless usage is up 150 percent over March 2019, according to NMI.

NMI surveyed 1,000 consumers, half in the United States and half in the U.K. And while the majority said they regularly use a credit or debit card to pay for in-person payments, 36.2 percent of Americans (75 percent of U.K. consumers) regularly use the contactless feature on those cards. Significant numbers (38.8 percent of U.S. consumers and 55.4 percent of U.K. consumers) said their preferences for contactless (cards and mobile wallet scanning) were related to the pandemic. Top reasons cited for using contactless payments include:

  • Convenience (73.3 percent U.S., 75.3 percent U.K.)
  • Speed (62 percent, 70.3 percent)
  • Sanitation (70.4 percent, 65.6 percent)

NMI also queried consumers on their use of tap-to-mobile, a technology that enables a business to load an app onto a smartphone so the device can be used as a contactless payment acceptance device. Both Visa and Mastercard began rolling out apps that support these conversions earlier this year. Mastercard calls its product Tap on Phone; Visa's version is called Tap to Phone.

Among Americans surveyed by NMI, 83 percent said they would likely use tap-to-mobile technology if it were offered by businesses where they shop at. The most common use case (among nearly three-quarters of Americans surveyed) is at restaurants.

Despite the consumer demand, many small and mid-sized businesses aren't delivering contactless payment experiences, according to NMI's data. The company surveyed 300 SMBs, half in the U.S. and half in the U.K., and found that about a third (34 percent) of U.S. SMBs don't offer contactless payment options, compared to 9 percent of SMBs in the U.S.

While a significant share (58.5 percent) of SMBs in the U.S. said they don't offer contactless payment options because they haven't upgraded their payment acceptance devices, nearly four in 10 (39 percent) said they didn't see a need to offer contactless payments. Among SMBs in the U.K., 40 percent said they hadn't yet upgraded, while 30 percent said they didn't see a need to offer contactless.

Tap to phone apps could usher in a sea change, however. Among U.S. SMBs surveyed nearly 95 percent said they would consider using the technology. (In the U.K. it was 96 percent.) Key factors that would influence SMBs to offer tap-to-mobile technology include:

  • Cost (64 percent of U.S. merchants, 67 percent of U.K merchants)
  • Customer demand (57 percent and 52 percent)
  • Security of business and customer transaction data (52.8 percent and 54.1 percent)
  • Easy setup/installation (53.5 percent and 39.6 percent)
end of article

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