Contactless Payments and Merchant Resiliency: Evidence from France in the Time of COVID-19

Abstract

During the COVID-19 pandemic, consumers were encouraged to use contactless payments. %To support this approach, the French banking authorities increased the limit for contactless payment from 30 euros to 50 euros. An important policy question is whether merchants with contactless payment technology are more resilient to an external health shock than those without. Using a matched difference-in-differences setting on a unique merchant card-sales transaction data, I find that merchants with contactless payment technology increase their card-sales amount (count) on average by 8.3 percent (10.2 percent) compared to merchants without this technology. I also find evidence that accepting contactless payment during an epidemic shock helps merchants attract more new consumers. Digital payment technology continues to support sales growth, especially for small businesses and new entrepreneurs.

Keywords: Digital payment, COVID-19, Business resilience, Sales growth, Firm-level data

JEL Classification: C21, E21, E42, E61, E62, O33