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VISA CASE STUDY

Proving the effectiveness of contactless

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One in five transactions in New Zealand are now made via contactless and mobile card payments, and these numbers are growing steadily.

In a nutshell

  1. The benefits for merchants offering contactless payment hadn't been properly quantified. We worked with Visa to uncover the sales and customer impact for Kiwi businesses. 
  2. The Merchant Contactless Study examined three years of data from Paymark’s network, analysing 4,638 contactless merchants and 29,903 non-contactless merchants across a number of industries. 
  3. The results clearly showed that contactless can give retail and hospitality operators the edge they need to succeed in today’s highly competitive commercial environment.

Despite the increasing popularity of contactless payments amongst consumers, the benefits for merchants offering this technology had yet to be properly quantified.

Visa engaged TRA to quantify how merchants benefit from this innovative payments technology, using Paymark data to ascertain the sales and customer benefits that merchants stand to experience.

We had to be rigorous in our approach in order to isolate the business impact of contactless. It would be easy to select merchants and assess the effects of contactless, but these merchants may have been growing for reasons beyond enabling contactless.

The Merchant Contactless Study examined three years of data from Paymark’s network, analysing 4,638 contactless merchants and 29,903 non-contactless merchants across hospitality, grocery, hardware, general retail and other industries.

We picked like-for-like merchants in these sectors and matched the actual sales, transaction and customer impact of those who had switched to contactless and those who hadn’t.

And by using actual sales data from the Paymark network, Visa could show the actual, irrefutable benefits of switching to contactless.

The results clearly showed that contactless can give retail and hospitality operators the edge they need to succeed in today’s highly competitive commercial environment.

In the past three years, merchants that have enabled contactless have enjoyed more than double the sales growth than those that haven’t. Contactless merchants have also seen more than double the growth in the number of transactions than non-contactless merchants.

Retailers that enable contactless also benefit from the value it provides in helping build customer loyalty and experience through ease of transaction. The Merchant Contactless Study showed that for contactless merchants, growth in customer numbers was double that experienced by non-contactless merchants. Contactless merchants also enjoyed triple the growth in the percentage of returning customers.

The Merchant Contactless Study provides new insight for the first time globally, validating the case for contactless payment methods as a driver of business growth.

The process

4,638 contactless-adopting merchants were compared to their own look-a-like ‘control groups’, each matching up to 10 non-contactless merchants.

Each control group was similar to its contactless merchant in terms of:

  • Same specific industry category as the contactless merchant and same time period prior to adoption.
  • Similar transaction volume, total sales and other factors.

Customer behaviour and merchant performance were then compared across the contactless and control groups.

For each contactless merchant, we compared 12 months of transaction history prior to and following the adoption of contactless technology with the respective transaction period of the non-contactless merchant to isolate the impacts.

The findings

Contactless merchants achieve at least double the growth rates of non-contactless merchants.

  • Better customer experience
  • Improved competitive advantage
  • Greater operational efficiency
  • Tech ready and future-proofed

The outcome

Visa has been able to quantify the commercial impact for merchants adopting contactless, resulting in an independent and robust platform for New Zealand businesses to understand the benefits of this innovative payments technology.

Karin Glucina
Partner at TRA

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