Contactless payments are becoming increasingly popular among consumers on both sides of the Atlantic. The ability to pay for goods and services with a simple swipe of a card, smartphone or other contactless device is making transactions faster, more convenient and secure for both customers and merchants.
Research across both the UK and US markets recently showed contactless payments are in the ascendancy, and people have been quick to adopt the technology. For instance – unsurprisingly – the UK Cards Association revealed that more people paid with contactless cards in 2015 than in any other previous year.
The fact that contactless usage is rising may not come as a shock, but the rate of growth was significant. Consumers spent £7.75 billion on their contactless cards last year, up more than 234 per cent from 2014.
Meanwhile, Juniper Research found that 44 per cent of consumers currently use contactless payments in the US, 17 per cent of whom do so at least once a day.
“Whether buying a sandwich on the go, or paying for a round of drinks or a tube journey, contactless has become the default way people choose to pay for every day shopping,” stated Graham Peacop, UK Cards Association chief executive.
UK and US contactless trends
One of the primary factors in the growth of contactless payments is technology innovation, providing consumers with a wider choice of devices that utilize this transaction method.
According to the UK Cards Association, more consumers started using smartphones and smartwatches to make contactless payments last year. Merchants also began implementing mobile point-of-sale devices to offer customers increased payment flexibility – enabling them to use cards or other payment devices in locations where previously cash might have been the default.
“A wide range of retailers are moving away from simply offering a traditional high street experience to embrace e-commerce and innovative ways of taking payments,” stated Mr Peacop.
His comments came as the British Bankers’ Association (BBA) unveiled a new report revealing what the organization described as a consumer-led revolution in personal finance.
The BBA noted that British consumers spent £1.1 billion on contactless cards in March 2016, with the country’s banks issuing more than 15 million of these cards in 2015. This was up more than half from the previous year.
In the US, smartphones are more popular than cards for contactless payments. Juniper Research showed 60 per cent of consumers preferred the former and 39 per cent opt for the latter, while seven per cent use smartwatches.
Two-thirds of US Apple Pay customers were very happy with the service, while just 38 per cent of contactless card users said the same. Overall, 90 per cent of those polled said they were satisfied with contactless as a payment method.
Engaging with consumers
Robert Cubbage, UK Banking and Capital Markets leader at EY, commented on the BBA results by saying banking is facing a challenging but transformational time. He added that consumers are increasingly utilizing services presented to them across multiple channels.
“For the banks themselves this means there are now more opportunities than ever before to engage with customers,” Mr Cubbage stated.
“And so there are crucial decisions to be made about how they manage these increased touch points through internet banking, mobile payments or their branches, and the quality of those interactions.”
Contactless cards are just one of a number of new payment technologies that consumers are adopting in an effort to make transactions more flexible and convenient.
Ultimately, financial institutions must modernize their services across multiple channels if they want to continue serving the needs of customers in an increasingly digital world.