Consumer financial literacy and habitual behaviour as drivers of contactless payment ownership

Historically, cash has been noted for its ease and convenience as a payment instrument; however, contactless payments now rival cash in this regard. Using UK survey data at a time when contactless payments were on the rise but not yet fully adopted, we examine the role of consumers’ financial literacy and trait habitual behaviours as drivers of contactless payment ownership. This unique timing allows us to identify a segment of the population without contactless card ownership; a rare opportunity given the current widespread adoption of the technology. We find that consumers’ financial literacy and proneness to routine behaviour are positively associated with ownership of contactless payment cards. Using propensity score matching techniques, we address the ex-ante heterogeneity between individuals exhibiting different levels of financial literacy, habitual behaviour, and non-random selection issues to show that our results are robust to potential endogeneity issues. Our findings can inform policymakers and banks about the adoption patterns of emerging payment technologies, providing insights that are particularly relevant for future technologies facing early-stage adoption challenges.