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Written by Cyndie Martini
on September 01, 2020

Contactless/cardless payments (card-not-present or CNP) continue to grow. In a world where many consumers are hesitant to engage with public surfaces due to COVID-19, contactless payments make perfect sense. However, CNP transactions were on the rise well before the pandemic hit.

A 2020 Discover Financial Services’ PULSE debit network study found that CNP transactions grew by 21% in 2019, compared to 2018. A rate of growth that's 10 times more than card present transactions. With the ubiquitous spread of smartphones and their heavy integration into our everyday lives, they have helped drive the growth of CNP transactions. Other drivers of growth include online shopping, where consumers pay through a company's website and apps such as Paypal, Venmo, and Zelle. Businesses are helping out as well by using debit for insurance payouts to their customers or paychecks to gig-economy workers.

Particularly, account-to-account transfers using debit grew and is the fastest-growing category. It grew by 41% between 2018 and 2019.

All of that together means the upward trend isn't showing signs of slowing down anytime soon. “Debit is being used more often by more consumers, and in a greater variety of ways than ever before,” PULSE’s executive vice president of product management Jennifer Schroeder, said to CreditUnionTimes. “This year’s Debit Issuer Study shows that, even before the COVID-19 pandemic, debit use was growing in digital-commerce channels. This growth was a key driving force behind the record 77.4 billion debit transactions that were made in the U.S. in 2019, up a very healthy 6.5% year-over-year.”

While CNP transactions are growing, at 27%, they still account for a smaller segment of overall debit transactions. Cards make up a whopping 73%. However, they only grew by 2% in 2019. As ecommerce continues to surge and merchants such as grocery and restaurants keep moving to CNP, CNP growth is expected to accelerate.

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