Contactless on the rise in the UK, but don’t forget about checks

In our modern era of contactless payments, mobile wallets and online banking, checks might seem like an outdated way of making deposits and transactions. Indeed, a recent study by research analyst Mintel showed that, in the UK, contactless payments have overtaken checks for the first time this year.

But despite the clear significance of this trend, banks should remember that what works for one portion of the banking public might not work for another. Consumers will always appreciate choice, so placing too much stock in payment innovations over traditional methods like cash and checks could be an unwise move.

Checks declining, but not disappearing

Less than a third (31 per cent) of British consumers used checks in the three months to April 2016, down from 40 per cent who used this payment method in 2015, according to Mintel. Use of contactless cards, meanwhile, is soaring. Around four in ten people (39 per cent) have used a contactless debit card this year, up from 28 per cent in 2015, while the proportion who have made a contactless credit payment has risen from 28 per cent to 34 per cent.

This means that checks are now the least common way for Britons to make payments, according to these findings, but they are still being used by nearly one in three people. The research also showed a consumer reluctance to say goodbye to tried-and-trusted payment methods with the finding that more than half (54 per cent) of people in the UK are not comfortable with the prospect of a completely cashless society. That proportion increased to 61 per cent of over-45s and 68 per cent of over-65s. Almost all UK consumers (97 per cent) used cash in the three months to April 2016, making it by far the most common payment method.

Discussing the findings, Rich Shepherd, financial services analyst at Mintel, said it was important to note that the recent boom in contactless payments is partly down to the fact that this transaction method had so much scope for growth in terms of acceptance.

“They [contactless cards] have moved beyond coffee shops and sandwich bars and are now entirely commonplace,” he added. “However, the real shift in behavior has only come over the last few years. It’s easy to forget that contactless cards were first launched back in 2007, meaning that the technology has been on British high streets for almost a decade. People’s payment habits change slowly, as can be seen with the check’s stubborn refusal to disappear from the payments landscape.”

‘Very different markets’

It could be argued that comparing contactless cards with checks is a pointless exercise, given their considerable differences. Anthony Duffy, director of UK and Ireland retail banking at Fujitsu, told Finextra that these two methods serve very different markets and consumer needs. Checks can be used to complete transactions of any value and require a lot of processing, while contactless payments offer maximum convenience, but have a payment limit of £30.

“Contactless payments and checks should be viewed as complementary, rather than competitive, payment options,” said Mr Duffy.

It might be tempting for financial institutions to focus all their attention and resources on exciting new technologies like contactless payments, but that would be to ignore the needs of a key portion of your customer base. People who still rely on traditional payment methods might not be as active or visible as those embracing the latest innovations, but they might be more likely to repay good customer service and choice with rock-solid brand loyalty.

Written by Andy Brown

Andy is marketing director for payments at NCR. He has nearly 30 years' experience in e-payment systems from the delivery and support of systems in the Far East and Europe, from both the product management and marketing perspectives. Based in the UK, Andy is responsible for marketing NCR payment solutions.

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