New research conducted by MasterCard has found that US consumers that make use of a contactless card increased their spending on that card by nearly a third.
A US PayPass adoption study conducted by MasterCard Advisors has found that contactless cards can lift spending on a particular card by 30%.
The study analyzed changes in account transaction behaviour after a consumer adopts a contactless payments solution. The researchers found that, within the first 12 months of their first contactless transaction, cardholders spent almost 30% more on average with a PayPass-enabled card.
For the study, the analysts compared account behaviour between two segments of US accounts over a twelve month period starting from July 2009. The sample was comprised of US-based consumer credit cardholders. Accounts in both the test and control segments were open for at least four months and had made purchases with non-PayPass cards in both the pre- and post- periods.
One segment had no PayPass activity, while the other initiated PayPass use in July 2009. “The fixed ‘start date’ meant that the researchers could track the lifecycle of PayPass use and its impact on overall behavior as accounts became familiar with its use,” says MasterCard. “The methodology also allowed the research team to control for differences between the two segments by comparing pre-adoption behavior.”
The researchers then divided the combined sample into three spend segments: Up to US$499, $500-$1,499 and $1,500 or more per month, based upon monthly spend in the three months prior to July 2009, to determine if account behaviour differed by spending segment.
The 30% lift was consistent across the three segments, says MasterCard, regardless of their spend levels prior to adoption.
“The research also found a clear correlation between contactless adoption and preference for a particular card, illustrating that a contactless payments solution may help drive top-of-wallet behavior,” MasterCard adds.
“In our highest spend segment, this lift translates into approximately $600 per month in incremental spend,” says Jonathan Orndorff, principal at MasterCard Advisors. “Increases like this can have a significant impact on the issuer business case for contactless.”