Digital Payment Adoption and Contactless Payments Surge Three Years Ahead of Expectations

New report from Blackhawk Network examines global shopping and payment preferences

As consumer spending returns, a new report from global payments provider, Blackhawk Network, has found that the 2020 eCommerce surge created shopper affinity around the world for retailers that offer digital payments. The findings of the Global Digital Payments study were based on a survey of more than 13,000 respondents in nine countries which represent nearly half of the world’s card payment volume. The report found that surveyed shoppers across all regions reported they spend more money and have a deeper connection with retailers that offer more digital payment methods. Across all regions, 69% of digital wallet users surveyed reported shopping more often since using a digital wallet, and 54% report spending more money at retailers where they can use digital payments.

“Shoppers continue to look for easier ways to tap into mobile wallets, digital gift cards, rewards and loyalty points, and as a result, are increasingly seeking retailers that have embraced digital and contactless payments,” said Theresa McEndree, global head of marketing, Blackhawk Network. “Our research shows that consumers around the world are drawn to retailers that offer fast, seamless and secure digital payments. As we start to hit more of a stride in our economic recovery, the winners will be the merchants that cater to the everyday digital payment preferences of today’s shopper.”

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The report provides a global look at how consumers are using digital wallets, gift cards and rewards, and what motivates them to continue these behaviors over the next year. The research also explores what encourages consumers to shop with a specific retailer, and how shoppers may deepen their affinity for retailers that offer and accept digital payment options. Countries included in the research are the United States, Australia, Brazil, Canada, Germany, India, Mexico, Netherlands and the United Kingdom.

Key trends from the report include:

eCommerce surge created shopper connection with retailers that offer digital payments

Adoption of digital wallets, digital gift cards, QR codes and barcodes accelerated in the past 12 months. Survey data indicates these digital payment methods have an impact on how shoppers feel about a particular brand—and how likely they are to frequent that retailer. The rise in digital payments is a bright spot for retailers that are embracing digital payments. Surveyed shoppers across all nine countries report they will spend more money and have a deeper affinity for retailers that offer more digital payment methods.

• Along with shopping more frequently (69%) and spending more (54%) at retailers where they can use digital payments, a majority of shoppers surveyed (85%) also reported that digital wallets have made shopping easier.
• The top retail segments where digital wallet users are using digital payment methods the most are: online-only retailers (41%), grocery stores (37%) and mass merchandisers (26%).

QR codes were one of the most used new digital payment tools during the pandemic

QR codes, or barcodes on a mobile device, were a digital payment tool that emerged with new digital wallet users during the pandemic—and were used more frequently at grocery stores and online-only retailers.

• Eighteen percent of respondents used a QR code or barcode for the first time during the pandemic, and 40% report using them more frequently.
• QR codes offer opportunities for retailers looking to gain a share of the growing digital wallet user audience, with 30% of non-users being interested in using barcodes or QR codes.

Gift cards helped people connect to eCommerce in 2020

With an ability to be easily bought and used through online-only retailers and essential businesses—like grocery stores—shoppers turned to gift cards. Digital gift cards also saw huge increases in popularity since they are an easy contactless payment option to send and use.

• Digital gift cards got a boost from self-use: 34% of respondents reported purchasing a physical or digital gift card for themselves in the last year. Additionally, 46% of respondents report being interested in digital gift cards to make purchases online.
• Digital gift cards were used most at online-only retailers: Nearly half of surveyed digital gift card users have used them at online-only retailers in the last year—though Brazil and Australia residents are least likely to use them at online-only retailers. For residents of Australia, more than half of digital gift card users used them at grocery stores.

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Hurdles to widespread digital payment adoption remain

Despite the increase in digital wallet usage and acceptance, 50% of surveyed digital wallet users reported friction in using them because they are not accepted everywhere—including 30% of respondents who reported they can’t always use the same digital wallet at the same retailer in-store and online. Across all the regions surveyed, 27% of respondents reported there were too many digital wallet options, while 20% don’t feel as comfortable using digital wallets as they do using traditional payment methods.

Top opportunities for digital wallet adoption:

• • Broader acceptance: 63% of respondents report they are more likely to shop at a retailer if they accept the digital payments they use.
  • Seamless omnichannel experience: 73% of respondents say they want to be able to pay the same way they pay online and in-store.
  • Ubiquitous payment option: 27% of respondents cited that they don’t like digital wallets because there are too many options.
  • Faster, secure and seamless checkouts: a secure (47%), fast (36%) and easy (39%) checkout process are the payment preferences that matter most to surveyed consumers when paying for goods and services in the next 6–12 months.

In-store shopping will rebound

Since the pandemic, two-in-five respondents have been making in-store purchases less frequently, but once shopping returns to pre-pandemic levels, slightly more shoppers will return to in-store than online.

• Fifty-five percent of in-store shoppers plan to continue in-store shopping when shopping centers return to pre-pandemic levels, compared to 53% of surveyed consumers who will buy online and opt for at-home delivery.
• Consumers have missed the in-store shopping experience. Fifty-one percent of surveyed shoppers rank the ability to see and touch items in-store before making a purchase as one of the most important factors when they are able to return to their pre-pandemic shopping habits.

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