Covid-era contactless payment limit rises drove consumer usage

According to a recent study by the Swiss National Bank, the increase in contactless transaction limits during the Covid pandemic led to a significant increase in the use of contactless payments. However, the study also found that the increase in the use of contactless payments did not lead to a significant increase in the adoption of the technology.

The researchers based their analysis on anonymized, transaction-level data for a large sample of point-of-sale debit card payments made in Switzerland between 2019 and 2021. In Switzerland, the tap-and-go limit was doubled from CHF40 to CHF80 in April 2020, which resulted in the share of card payments eligible for tap-and-go suddenly increasing from approximately 60% to 80%.

The study found that the share of contactless transactions increased by 17 percentage points from 44% to 61% following the onset of the pandemic. However, the researchers concluded that the increased tap-and-go limit had only a small effect on first-time adoption of contactless payments.

The authors of the study also found that financial intermediaries, such as card schemes and card-issuing banks, play an important role in consumer adoption and use of payment technology. They suggest that policy-makers should consider the role of intermediaries and verification rules when evaluating payment innovations, such as instant payment systems or central bank digital currencies (CBDCs).