Apple CEO Tim Cook told analysts in a third-quarter 2020 earnings call that “contactless payment has taken on a different level of adoption … and I think we’ll never go back.” He said the company was “very bullish about this area,” and believes that there are more things that Apple can do there.
The arrival of the coronavirus pandemic sharply increased consumer interest in using contactless payment methods to avoid using cash or to minimize the touching of surfaces in a physical location. This has benefited both established and emerging digital payments players. As Cook stated, “Apple Pay is doing exceptionally well, as you can imagine, in this environment.”
Although Cook didn’t mention it, in July 2020, 9to5Mac reported that Apple will support QR codes for payment as part of iOS14, the new iPhone operating system. All this points to a rapidly evolving consumer payment system that is creating both competitive challenges and opportunities for incumbent payment system players, including many banks and credit unions that are card issuers and provide payment related merchant services.
The consumer payments ecosystem is a moving target, observes Jared Drieling, Senior Director of Consulting and Market Intelligence at The Strawhecker Group (TSG). “We’re seeing a fluid situation in terms of how consumers are making payments, the tools they are leveraging and where they’re spending,” he says.
The fast pace of change is highlighted by research TSG conducted in partnership with Visa. The study puts some hard numbers on payment trends, particularly contactless cards and mobile wallets. One of the most significant findings is that these changes have proven to be a shot in the arm for fintech players like Square and Shopify. While it is still true that the incumbent providers of payment system services also benefit, the seeds of increasing disruption are being sown as digital payments rapidly evolve.