October Spending Trends and Changing Payment Preferences

Millennials and contactless payment: Permanent fixture, or soon to 86?

It’s a go. Tap and go, that is.

Contactless payments, as reported in September, have grown to mammoth popularity at businesses big and small.

This shouldn’t be much of a surprise, considering the concern for sanitation that’s come into focus with COVID-19. But contactless payments are up beyond expectations. And it begs to question: Will contactless payments remain a fixture when the pandemic subsides?

Contactless payments are growing so quickly they’re outpacing EMV chip card transactions at a sample of small businesses. Month-over-month, this trend has not slowed  — whatsoever.

At food and drink retailers, the number of transactions made via contactless cards and devices is up over 162% since the start of COVID-19. At retail businesses, contactless payments are up 244% from the March baseline.

While transactions have boomed since facing a fallout at the start of COVID-19, this number  still stands far above the rest. For comparison, transactions made via chip cards were down 1% in September at retail businesses, and up just 42% at food and drink retailers.

Growth in chip & contactless card transactions
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The U.S., compared to Canada and Europe, has been historically slow to adopt contactless payments. Barriers, including the learning curve for both merchants and consumers, have slowed the adoption. But the pandemic accelerated the trend.

For businesses, reducing the risk of infection is a top priority to preserve in-store sales. But even without the pandemic, contactless payments may already have proved itself a must-have.

According to a January survey of more than 1,350 customers, 75% of Millennials said they were satisfied with contactless payments. Another 70% of Gen Z shoppers said they liked it, as well. Some 65% Gen Z respondents even said contactless payments were a “must have” for merchants.

So, is COVID-19 behind the rise, or are Millennials to blame?

It’s a little of both. Millennials and Gen Z were early adopters to a trend that accelerated into high demand with the global pandemic. Shoppers are becoming savvier with technology, and they’re coming to expect the same experience wherever they go. This expectation has all but diminished the barrier that questioned demand.

Restaurants face a cold wave

As much of the population braces for a cold wave, so do restaurants. With fall swinging into season, food and drink retailers are seeing a slight but gradual dip in sales and transactions. Industry sales have continued to trend higher since the economy started to reopen following the lockdowns, but October moved at a much slower pace.

Consumers are spending more cautiously. And based on the data, they’re paying extra special attention to these retailers not only for the safety of their budget, but also their health. It’s likely this trend continues with colder weather setting in. If all holds true, this industry’s recovery will be even more drawn out.

Shoppers pack the cart

A pandemic can change a person. It can also change their wallet.

Forgoing months of social outings meant consumers didn’t face the social pressures to spend money frivolously like they normally would. That put a little extra change in a number of people’s pockets. But it didn’t change a lot of spending attitudes.

Retail, which is the most volatile sector, made a huge jump to kickstart the month. Posting three consecutive weeks of growth from September to early October, sales at retail businesses increased 12.8% week-over-week.

Throughout the remainder of October, sales figures declined, then increased again. This segment has continually proved its volatility. But one trend shows through: Sales figures were up even when transactions were down. Case and point: Where there are fewer in the aisle, there are more packing the cart.

Retail Transactions VS Sales
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Businesses ride the ship

The past few months certainly haven’t been easy for small businesses. COVID-19 pushed the pause button on progress, and now small businesses are looking to hit the reset.

In retrospect, many have pushed the reset and resumed steady business. Sales and transactions picked up most significantly in June. Following another uptick in July, sales and transactions have remained modest.

Transactions are up 60% since the early days of the pandemic. Sales are up 43% since the same mark. While these figures may not be at the level businesses want, they have now held steady for three consecutive months.

More good news may be ahead, as reports suggest many may start holiday shopping even earlier, in the wake of the pandemic. Zoom out: October may steal some of the sales spikes common in November and December, when all is said and done. Time will tell the outcome, but projections make it optimistic to expect more holiday spikes earlier than later.

We’re in this together

Small businesses should be equipped to process credit card and contactless payment transactions. Acumen Connections provides your business with the tools to make accepting payments fast, simple, and secure.

We know that one size does not fit all. We work with you to understand the uniqueness of your business, and tailor a solution right for you.

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