How does contactless payment affect your marketing?
It is easy to fall into the trap of thinking that marketing operates in its own bubble and is not impacted by small, material concerns of the outside world. When crafting big strategies, working with large volumes of data and building ideal customer profiles, losing sight of the fact that all of these factors are co-dependent on the practicalities of purchasing can be dangerous.
Take, for example, the decline of cash due to the rise of contactless payments. Although this change may seem incremental or even insignificant, this move towards a cashless society has a profound impact on the psychology of purchasing decisions and spending habits, and thus is impacting your marketing strategy. An exploration of the impact of contactless is therefore timely and necessary if marketers are to adapt to this changing environment.
The rise of contactless
The steady increase in contactless payments has happened so seamlessly, quietly and incrementally that few have stopped to think about its implications. In a very short space of time, bricks-and-mortar stores have gone from charging their customers transaction fees for each card purchase to visibly groaning when forced to handle cash pound notes.
In July 2017, The Guardian reported that ‘for the first time, notes and coins have been toppled from their position as the UK’s number one payment method,’ with ‘cards now account[ing] for more than half of all retail purchases, according to the British Retail Consortium. Pointing out that it is a mere 10 years since contactless payments were first introduced to the UK, and that as recently as October 2015 the method only accounted for 10% of all purchases, this exponential rise in contactless has happened with striking speed.
According to eMarketer, ‘contactless card spending in the UK ballooned 223% in 2016 to total £25 billion.’ Pointing to the greater availability of contactless machines in large stores and supermarkets and the increased upper spending limit as key drivers of this increase, eMarketer also noted that although contactless spending rose across all demographics, in fact ‘consumers aged 60 and older had the fastest-rising adoption of contactless grocery payments.’ Flying in the face of conventional beliefs that this older demographic is more resistant to and less trusting of technological change, these insights suggest that the permeation of contactless has been widespread.
The impact on purchasing psychology
Far more than simply a retail statistic applicable only to major supermarket chains or payment providers, these insights have a knock-on effect for brands and how they market to their consumers. Whether offering products or services, the impact of contactless payments on purchasing psychology should be fully explored by marketers.
According to an article by The Spectator contributor and Vice Chairman of Ogilvy Rory Sutherland, ‘in many ways the credit card is the greatest consumerist mind-hack ever invented’ and that ‘what you buy is surprisingly dependent on how you pay for it.’ Extending this logic to contactless payments, Sutherland believes that it will not be long before theatres, pubs and charity donations can be made without cash.
Already visible in large parts of the London economy, the psychological distance that not having to part with physical cash puts between you and your purchase inevitably changes your relationship to spending. This makes you more likely to spend more and at greater speed since you cannot see the money disappearing from your wallet, be less emotional in your purchasing decisions and, in the case of the charity and voluntary sector, less likely to be committed to the cause you give your money to.
What can marketers do?
Inherently reliant on the emotional connection between brand and consumer, this change in purchasing psychology poses a problem for marketers. Though the increase in spending can of course contribute to increased sales and better bottom lines, the question of how to connect with the consumer in a contactless age is a burning question most noticeable by its absence in marketing commentary.
One way that marketers can respond to contactless is by creating a sense of connection to the brand via other means, for example bringing together contactless payments, loyalty schemes and personalised offers under the umbrella of an app. This has proved popular with coffee houses and big name brands like Café Nero, who allow customers to register their card with the app and then use this as the hub of their interactions with the brand. This has the added bonus of acting as a data capture platform for marketers, feeding back insights about which branches customers frequent and their regular order, allowing them to then better target campaigns.
By seeing contactless as an opportunity to explore other avenues for connecting with customers, brands can ensure that they do not get left behind by the cashless revolution. Although we may not be there just yet, understanding the developing psychology of purchasing goes a long way to being ready for when it happens.