Consumer adoption and use of financial technology: "tap and go" payments

Martin Brown, Laura Felber and Dr. Christoph Meyer



JEL classification
D14, E42, G21, G23, G50, O33

Payment choice, Financial intermediation, Technology adoption, Contactless payments, COVID-19


Financial intermediaries play an important role in consumer adoption and use of payment technology. Card schemes and card-issuing banks set rules for cashless payments between consumers and merchants. We document that these rules have a strong causal impact on the use of digital payment technology. We study an increase in the value limit for contactless cardholder verification (“tap-and-go” limit) that was introduced at the onset of the COVID-19 pandemic. Our analysis is based on anonymized, transaction-level data for a large sample of point-of-sale (POS) debit card payments between 2019 and 2021. We show that the increase in the “tap-and-go” limit caused a significant increase in the consumer use of contactless payments but only a minor increase in first-time adoption of this payment technology. Our results suggest that policy-makers are advised to consider the role of intermediaries and verification rules when evaluating payment innovations, such as instant payment systems or central bank digital currencies (CBDCs).