Here's how the pandemic is completely changing how we pay
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.
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.
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
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.
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.
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.
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.
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 5X | New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App. |
| 3X | Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines. |
| 2X | Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Pros
- Valuable dining and food-related credits
- Flexible rewards with airline and hotel transfer partners
- Multiple travel and purchase protections
- No foreign transaction fees
- Access to Amex Offers for additional savings (enrollment required)
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $8,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App.
- Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines.
- Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- Pay It® lets you tap in the American Express® App to quickly pay for small purchase amounts throughout the month and still earn rewards the way you usually do. Plan It® gives you the option to split up big purchases into equal monthly payments with a fixed fee. You’ll know upfront exactly how much you’ll pay.
- Updated! $120 Dining Credit: Earn up to a total of $10 in statement credits monthly when you pay with the Gold Card at Grubhub (including Seamless), Buffalo Wild Wings, Five Guys, The Cheesecake Factory, and Wonder. This can be an annual savings of up to $120. Enrollment required.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year at over 10,000 qualifying U.S. Resy restaurants after you pay for eligible purchases with the American Express® Gold Card. That’s up to $50 in statement credits semi-annually. Enrollment required.
- $84 Dunkin' Credit: Earn up to $7 in monthly statement credits after you pay with the American Express® Gold Card at U.S. Dunkin’ locations. Enrollment required.
- $120 Uber Cash on Gold: Enjoy up to $120 in Uber Cash annually with your Gold Card. Just add your Card to your Uber account and you'll get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an Amex Card for your transaction.
- New! As an American Express® Gold Card Member, you can enjoy complimentary Hertz Five Star® Status. Enjoy benefits like skipping the counter at select locations, adding an additional driver at no additional cost*, and vehicle upgrades**. Benefit enrollment and Hertz Gold+ registration are required. *Additional drivers must meet standard rental qualifications and must be a spouse or domestic partner to qualify as complimentary. Other additional drivers subject to fees. **Benefits are subject to availability and vary by location. Additional Hertz program Terms and Conditions including age restrictions apply.
- Take advantage of a $100 credit towards eligible charges* at over 1,300 upscale hotels worldwide when you book The Hotel Collection through AmexTravel.com or the Amex Travel App **. *Eligible charges vary by property. **The Hotel Collection requires a two-night minimum stay.
- Book your travel through the Amex Travel App with added peace of mind – backed by American Express® service and support. Only for American Express® Card Members.
- Whenever you need us, we're here. Our Member Services team will ensure you are taken care of. From lost Card replacement to statement questions, we are available to help 24/7.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.