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Here's how the pandemic is completely changing how we pay

July 11, 2021
6 min read
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The U.S. has historically been slow to adopt contactless payment -- but that's all rapidly changing right before our eyes. A big reason? The coronavirus pandemic.

"When possible, it would be advisable to use contactless payments to reduce the risk of [COVID-19] transmission," a spokesperson for the World Health Organization said earlier this spring.

And as technology continues to advance, credit card issuers are introducing contactless payment methods to the U.S., where historically, it has been much less popular than other areas, such as Europe and Canada.

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Contactless payments are not only more convenient but also more secure -- and now more sanitary -- than swiping your card. So let's take a look at which contactless payment options are available, why it's growing in popularity and what all of that means.

What are contactless payments?

Contactless payments come in two main forms on a credit card – mobile wallet or app payments and via contactless technology embedded directly into the card.

If your card is equipped with contactless technology simply hold it near the card reader to complete your transaction. Keep in mind, the payment terminal will need to have near-field communication (NFC) capability, so this won't work for older card readers.

(Photo by DjelicS / Getty Images)
(Photo by DjelicS / Getty Images)

Related: How to take your small business contactless

The growth of contactless — and what that means

In 2016, only 3% of all credit cards were equipped to handle contactless transactions. However, credit card networks and issuers have seen rapid upticks in contactless in recent years, especially during 2020.

Since the coronavirus outbreak began, fears over the transmission of the disease have forced consumers to rethink how they shop, spend and pay.

Related: The latest credit card benefit changes you need to know about

Contactless MTA subway payment (Photo by The Points Guy)

For instance, Mastercard reported a 40% growth in contactless transactions worldwide in the first quarter of 2020 alone. And surveys have indicated that more than half of new tappers will continue to use contactless even after the pandemic.

Visa says that tap-to-pay transactions in everyday segments such as grocery and pharmaceutical are up more than 100% year-over-year. Overall, contactless usage in the United States has grown 150% since March 2019.

Related: 6 ways to pay without touching anything

What happens to cash?

While this is accelerating the global economy toward a more card-focused future, cash isn't just going to disappear. While card payments and contactless will continue to dominate, cash is still king — especially for marginalized communities, including the elderly and lower-income earners.

(Photo courtesy of Shutterstock)
(Photo courtesy of Shutterstock)

For some, access to banks and electronic payments just isn't possible and may create an additional chasm between the haves and have-nots. The disappearance of ATMs and retailers that won't accept cash payments will particularly hurt the unbanked.

Related: Dirty money: Could ditching cash keep you healthier this season?

Are contactless payment methods more secure?

For contactless to work, a unique one-time token is sent to the payment terminal for each transaction. The token does not contain any of your card details, so if the purchase is compromised, that token cannot be used to make another purchase.

This added layer of protection is the same system that is used when you insert your card's chip into a card reader, except contactless payments process much faster (in about half the time). Mobile wallets also have the added step of needing to verify with a PIN, password, fingerprint or facial recognition before a payment can be made.

(Photo via Shutterstock)
(Photo via Shutterstock)

One common concern is that thieves could use NFC card readers to steal your data electronically by getting physically close to your wallet. However, any hacker would need to be extremely close (within four-10 centimeters) and thanks to tokenization they still wouldn't be able to swipe your card data.

Related: Best contactless credit cards: Tap to pay

Where in the U.S. can you make contactless payments?

While contactless payments are not as popular in the U.S. as elsewhere, they are becoming more common each day. The vast majority of transactions are processed on payment terminals that are NFC-enabled and that number continues to grow as well. And that's on top of the fact that nearly everyone has a smartphone with access to a mobile wallet.

(Photo courtesy of Shutterstock)
(Photo courtesy of Shutterstock)

Related: Does your Amex card feel light? Here's why

Many merchants also have contactless payment options available with their apps. For example, you can make a contactless payment at Dunkin' Donuts or Starbucks through their apps. BP has an app where you can even pay via the app at the pump. And we're seeing the technology spread to public transit with the New York MTA launching a new contactless system.

Which card issuers are using contactless payments in the U.S.?

Almost every major card issuer in the U.S. has begun rolling out contactless card technology or has announced plans to. But even if a specific card that you have isn't outfitted with contactless payment technology, you still have the option of adding that card to a mobile wallet and making touch-and-go payments that way. This effectively means that as long as you have a smartphone, contactless payment is an option for you.

For more information, check out our guide to our favorite contactless payment-enabled credit cards.

Bottom line

Contactless credit cards and payments are wildly popular abroad but have been slow to catch on in the U.S. However, that is rapidly changing with coronavirus, the spread of NFC payment terminals and nearly every major U.S. bank issuing contactless cards.

Given the increased security, speed, and touch-free world that we live in now, it's not a surprise that contactless has arrived in full force here in the U.S. -- and found even more adoption internationally.

Related: First look at the revamped Google Pay app with a new look, rewards and much more

Additional reporting by Jason Stauffer.

Featured image by (Photo by Jacob Lund/Shutterstock)
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
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  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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3XEarn 3 Points per $1 spent at Restaurants and Supermarkets
3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
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    For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

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Why We Chose It

The Citi Premier’s 3 points per dollar spent across a wide range of popular categories is one of the more lucrative offerings in the world of points and miles. The Citi Premier comes with a $95 annual fee and is currently offering a solid sign up bonus of 80,000 points after you spend $4,000 on purchases within the first three months. It also has some valuable transfer partners to make the most of your rewards. Add in access to Citi Entertainment plus a $100 hotel credit for any single-stay hotel booking that exceeds $500 or more, excluding taxes and fees, booked through the Citi travel website, there are few reasons why the Citi Premier should not be in every traveler’s wallet.

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  • Earns 3x points on restaurants, supermarkets, gas stations, air travel and hotels.
  • $100 annual hotel savings benefit (on single hotel stay bookings of $500 or more, excluding taxes and fees, booked through thankyou.com)
  • Points transfer to 16 airline programs, from JetBlue to Virgin Atlantic.
  • World Elite Mastercard benefits, extended warranty, damage and theft protection.

Cons

  • $95 annual fee
  • Lacks travel protections that other travel rewards cards come with
  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • No Foreign Transaction Fees on purchases