A new study from Swiss National Bank has revealed that the increases in contactless transaction limits that were rushed through in many countries during the Covid pandemic drove an increase in the use of contactless payments but led to only a minor increase in adoption of the technology.

The Swiss central bank’s 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 country we study – the tap-and-go limit was doubled from CHF40 to CHF80 in April 2020. This change implied that the share of card payments eligible for tap-and-go suddenly increased from approximately 60% to 80%,” say the researchers.

The share of contactless transactions increased by 17 percentage points from 44% to 61% following the onset of the pandemic, the researchers found.

The document goes on to show that “overall, our between-card analysis suggests a strong causal effect of the increased tap-and-go limit on the use but only a small effect on first-time adoption of contactless payments.” 

Impact

The authors of ‘Consumer Adoption and Use of Financial Technology: Tap and Go Payments’ found that “financial intermediaries play an important role in consumer adoption and use of payment technology.

“Card schemes and card-issuing banks set rules for cashless payments between consumers and merchants. We document that these rules have a strong causal impact on the use of digital payment technology.

“Our results suggest that policy-makers are advised to consider the role of intermediaries and verification rules when evaluating payment innovations, such as instant payment systems or central bank digital currencies (CBDCs).”

The 56-page document, which includes details of the data and methodology used in the study, can be downloaded from the Swiss National Bank’s website.

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