Business
It shouldn’t have taken a pandemic to adopt contactless payments
Published by maria gbaf
Posted on December 9, 2021
5 min readLast updated: January 28, 2026
Global Banking & Finance Review®
Company
Published by maria gbaf
Posted on December 9, 2021
5 min readLast updated: January 28, 2026
The pandemic accelerated contactless payments among micro businesses, overcoming high fees and outdated tech. Local shopping habits changed, boosting contactless adoption.
By Kasper Enggaard Krog, CEO at mobile payment and business technology firm, Vibrant, says micro businesses have been badly let down by contactless payment providers.
Prior to the pandemic, a trip down the high street would often require cash. Most larger stores would take card payments, but the smaller ones either wanted money or reluctantly took contactless – perhaps with a minimum spend – in the knowledge that it would cost them.
From corner shops to cafes and florists to barbers, between 40[i] and 47[ii] per cent of micro businesses didn’t accept card payments in 2019. Meanwhile, tradespeople might take a cheque or send an invoice for a bank transfer.
They held out against modern payment types despite the fact there are 6 billion contactless cards globally and 47 per cent of people prefer to pay with one when making a purchase in person[iii]. On the surface, it might seem like micro businesses were being obstinate. People were offering them payment, why wouldn’t they just allow them to do so with a card?
Why were merchants not moving with the times?
Upon closer inspection, the answer is clear. For the smallest of merchants – perhaps sole traders and market stalls – taking a card payment resulted in expensive ongoing fees, slow settlements, lots of admin and required an investment in awkward and outdated technology.
The recurring costs all added up and while larger retailers and merchants could justify them, micro businesses couldn’t when cash was still a viable alternative. To put it in perspective, transaction fees are typically between 1 per cent and 3 per cent, not to mention authorisation fees and merchant service charges[iv]. A credit card reader might be about £20 and the same for a receipt printer. This all eats into profit, not to mention time.
The pandemic forced change
However, the pandemic made micro businesses begin accepting card payments. There are two factors behind this. The first is the explosion in local shopping habits caused by enforced lockdowns. For months it was incredibly hard to visit larger retailers. Corner shops and local cafes became a lifeline[v].
As a result, consumers were given a chance to see a new model of shopping locally in their communities. Many enjoyed it, and discovered new ways of getting the goods and services they needed. What’s more, the people they began shopping with often lived in their area and understood their needs. In fact, according to research, the convenience store sector grew by 6 per cent in 2020[vi].
This led to the second factor. With more people frequenting local shops, the merchants needed to assure safety and minimise the risk of the virus spreading. Contactless payments were one obvious solution. In fact, the number of purchases made in May 2021 via contactless technology doubled compared with the same month a year earlier and was up 50 per cent on May 2019[vii].
Why did it take a pandemic to force change?
The adoption of card payments among the smallest of businesses is fantastic. They’re opening themselves up to a huge market of customers who might previously have chosen to go into a larger store that didn’t demand cash.
This is undoubtedly good for consumers and merchants alike. But it does beg the question, why did it take a pandemic to cause the change? Why did micro businesses need to face either financial ruin or contracting COVID to finally adopt contactless?
It’s clear, the existing model is broken. The barriers to accepting card payments remain – high cost, poor tech and slow settlements – but they’ve been overcome through necessity rather than benefit. These businesses remain woefully underserved yet have been forced to accept what is on offer. There must be another way.
Importantly, there is. It’s now possible for artisans, mobile traders, hairdressers, car washes – every type of micro business – to accept contactless payments using only their mobile handset. No extra tech add-ons. No frustrating dongles or readers that are easily forgotten or lost and that will one day add to the giant trash heap of obsolete, single-function peripheries. Anyone with a contactless reader will soon consider them in the same way as calculators, MP3 players and digital cameras.
In addition, this innovation not only accepts payments, but in 2022 it’s expected to allow micro businesses to run everything on their phone. They’ll be able to add product lists, stock details, accounting tools and much more. It’ll be a way for the smallest of firms to operate entirely on a mobile. Furthermore, the fees are clear, consistent, lower than the market rate and don’t bind merchants into lengthy contracts. It also has the backing of Visa – and Vibrant is leading the way.
This is a massive opportunity for the payments sector. Micro businesses are worth £1.85 trillion to the European economy[viii]. Their importance will grow, and they need the industry to wake up and meet their needs. It’s no longer acceptable to foist poor products and services upon them and allow the pandemic to drive change rather than innovation.
The explosion in local retail demands new payment methods – and they must be made available. In many ways, it’s a scandal that it took a pandemic to force change.
The article discusses the adoption of contactless payments by micro businesses, accelerated by the pandemic.
High fees, outdated technology, and slow settlements were major barriers for micro businesses.
Local shopping habits and safety concerns during the pandemic led to increased contactless payment adoption.
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