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The New Market For Contactless Payments To Battle COVID In The US


5 min read

The United States of America can be so many things: the land of the free, home to the bold, a promised land of equal opportunities – the list can go on indefinitely.

What the US is not, however, is a country with a flexible, adaptive, and future-oriented banking system. Or so it seemed, until the pandemic and the following lockdown.

Take one of the FinTech industry’s latest buzzwords, contactless payments, as an example. A study by A.T. Kearny, a global management consulting firm, states that as little as 3% of cards in the United States support contactless technology. This is an exceptionally low number, especially if compared to 64% in the UK, and a whopping 96% in South Korea.

What’s a contactless payment, you ask? Well, have you ever seen a person tapping their phone on a terminal to pay for a service? That’s the technology in action. And it is a pretty viable option, especially nowadays with counters hidden behind plastic and cash being viewed as a biohazard.

A post-COVID world

The slow adoption of contactless tech in America was a huge pain in the neck for payment startups looking to enter the US market. None have expected massive reach until at least 2022, as The Bank Of America was yet to spread contactless cards.

Then came the virus.

COVID-19 pandemic and the following lockdown helped a lot of consumers realize the benefits of contactless payments. There’s no need to interact with neither the seller, nor even their terminal. A smartphone or a smartwatch does the trick just fine.

“Everyone was expecting contactless acceptance to start moving the needle in about two years’ time in the US. So it needed Bank of America to start issuing contactless cards, [along with] Wells Fargo and other large banks. But we’ve seen that two-year development compressed into about two months. I’ve got lots of colleagues in the US who are posting about contactless payments and letters that they’ve received from Bank of America saying they’re going to be replacing their cards with ones that have contactless technology, which is great to see. But America is a vast place and it will take time. But it will definitely happen a lot quicker now because of COVID-19.” – Brad Hyett, CEO at a UK payment startup Phos.

That being said, even despite everything that’s going on in the US right now, our nation is inevitably going to recover.

What will happen to the banking industry once things return to status quo? Will the initial boost and spread of the technology influence the market or is it simply a head start before a long, exhausting marathon of adoption?

The Petri Dish

A Petri Dish is a shallow, transparent dish with a lid most biologists use to cultivate fungi, bacteria, or small mosses. The basic gist is that the scientists create a welcoming environment for cells or microorganisms, and observe how they grow.

If only there was a similar way of studying FinTech trends.

Oh wait, there is.

Africa is home to the largest market of unbanked population on the globe. The continent is a safe haven for FinTech startups to grow and blossom without the penicillin of a massive, clunky, inflated banking system. More on the matter, those FinTech startups that aim at resolving the challenges of inclusion are backed by the government and receive the lion’s share of VC funding annually.

Needless to say, Africa was very quick to adopt contactless payments as a tool to curb the COVID-19 pandemic.

  • Kenya, the continent’s leader in digital payment adoption turned to digital money as a public-health tool as soon as COVID-19 cases began to spread. Safaricom, Kenya’s largest telco implemented a free waiver on M-Pesa, the leading mobile money product in the region. All p-2-P transactions under $10 were to be free for three months. Furthermore, Uhuru Kenyatta, the president of Kenya, has issued a directive to “explore ways of deepening mobile-money usage to reduce risk of spreading the virus through physical handling of cash,” TechCrunch reports.
  • Ghana followed Kenya’s example.The country’s central bank supported mobile transactions while also increasing the fee for withdrawing cash from an ATM. KYC requirements on mobile money were eased as well.


The shift to mobile money should have taken the United States by storm. At least according to the numbers: one of three digitally active consumers in the US is using at least two fintech services, securing the country’s place on top of the financial technology services food chain with a whopping 52% of global market share.

And yet, the country lags behind the rest of the world.

Why is that?

Well, we can say whatever we want about the largest economy in the world, and how banks and financial institutions are too slow to adapt to a tech-first world, but let’s be real here. Above everything else, the United States is a capitalist economy. If there’s demand on the market, supply will come.

Ergo, the real culprit is noneonther than the Cash Is King mentality. This statement is even more true when it comes to making small daily purchases under $10.

The same Cash Is King mentality can be observed in our fintech Petri dish. Nigeria, the largest economy on the continent, has followed it to a T. And yet, the seemingly unsustainable growth in COVID-19 cases has swayed the population towards electronic payments - all thanks to one fintech startup.

Paga, the country’s largest mobile payment company, chose an unorthodox strategy, and it paid off with astonishing results.

Their strike was swift, efficient, and smart. Instead of rewarding the shoppers, Paga decided to allow retailers to accept payments without a commission. Most stores in the country simply refuse to accept cash, as a result.


COVID-19 is a crisis unlike anything we’ve ever experienced. The pandemic is reshaping the world one industry at a time. Perhaps it will not be the straw to break the financial industry camel’s back, but it is definitely a boost in the direction of widespread adoption of cashless transfers.

If there’s anything you can take away from reading this blog, let it be the following statements:

  • There is more room on the US market for fintech startups to make a move.
  • There are efficient ways of education consumers on the use of cashless payments.
  • Now may be the best time to introduce the market to your fintech solution designed to help curb the COVID-19 pandemic. Feel free to ask us how you’d do it.

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