Mastercard is seeing its volume slide but interest in contactless rise amid the pandemic

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The card network saw its switched volume, which includes transactions it authorized, cleared, and settled, plunge in the US and abroad as the coronavirus pandemic spread in March and April, per an earnings release. The card network’s annual switched volume change has been steadily declining: It first became negative annually in the week ending March 21, dropped to -30% annually in the week of April 14, then rebounded slightly to -20% YoY in the week ending Apil 21.

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Mastercard’s cross-border volume is facing even bigger struggles: Its annual growth plunged 55% in the week ending April 14, a far cry from the 16% YoY growth it posted in Q4 2019 on a local currency basis. These drops in volume line up with recent results from Amex, Discover, and Synchrony, as the pandemic is taking a toll on the entire payments industry.

However, a recent survey from Mastercard suggests the pandemic is driving contactless adoption and volume, potentially setting Mastercard up to recover some volume in the future.

• The majority of global consumers report they’re now using some form of contactless payment, likely due to concerns about the health risks of other payment methods. Seventy-nine percent of global banked consumers are now using contactless payments, per Mastercard. The pandemic is driving interest in the payment option since 82% of global respondents believe contactless is a cleaner way to pay, likely because it allows them to limit contact with people and shared surfaces. And this interest in contactless is already driving transactions, as contactless transaction volume grew twice as fast as noncontactless transaction volume between February and March at grocery and drug stores, per Mastercard.
• Contactless transactions’ safety could lead consumers to feel more comfortable making in-store payments, bolstering card networks’ volumes as stores reopen. The temporary closure of many nonessential businesses has cut into networks’ volumes. And even as stores start to reopen in certain markets, consumers may be wary of making purchases at these stores, especially if they know they’ll need to directly interact with a cashier or point-of-sale (POS) terminal. But rising contactless adoption gives more consumers a way to make in-store payments that avoid those issues, potentially leading consumers to return to spending in-store faster, helping card networks’ volumes rebound. 

The pandemic’s influence could lead to a long-term preference for contactless payments in the US, which has been relatively slow to adopt the payment method. Just 51% of US respondents are now using contactless payments, per data from Mastercard sent to Business Insider Intelligence. That’s well behind the 79% of global consumers doing so, but may still mean US consumers are more interested in contactless payments than they were previously. And with almost one-third of US respondents changing their top-of-wallet card to a contactless one, per Mastercard, the payment method is positioned to remain popular in the country even after the pandemic subsides.

This could be especially true now that consumers will be exposed to contactless payments’ other benefits, like speed, leading to a more permanent behavioral change, Linda Kirkpatrick, President, US Issuers at Mastercard, told Business Insider Intelligence.

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