Lunch, drinks and travel – what’s behind the boost in mobile NFC payments?

Image credit: iStockphoto/pixelfit

Many major tech companies have been promoting mobile contactless payments in the last few years, with apps such as Apple Pay and Android Pay promising to offer a more convenient alternative to cash or contactless cards.

And new figures have suggested that many more people are starting to turn to this option as a primary choice when they’re making low-value payments. Research by Worldpay reveals that in the UK, around 38 million mobile NFC transactions were completed in 2016, with the value of these payments reaching £288 million ($351 million).

This marked an increase of 247 percent compared with the previous year, with the organization noting that there was a significant increase in adoption following the launch of Android Pay.

Light bites and pints drive adoption

Worldpay’s research also offered some insight into where mobile payments are proving most popular, and it seems small, everyday purchases are the main use case. For instance, Worldpay found more than half of all mobile tap and pay purchases it processed in 2016 (54 percent) were for lunchtime ‘meal deal’ offers at supermarkets and grocery stores.

This indicates that busy workers are using the technology as a convenient way to grab lunch without needing to hunt around in wallets or purses for cash or a card. Other common uses for the technology included pubs, bars and restaurants, which accounted for 20 percent of the total.

A large percentage of UK adopters were in London, which may indicate how widespread contactless POS technology is in the capital, as well as suggesting that the solutions are being used by younger, affluent consumers who are more likely to live and work in urban areas. Almost a third of UK transactions (32 percent) took place within the capital, while people in the nearby south-east accounted for a further 14 percent of purchases.

The fact mobile tap and pay can also be used for travel may be another factor influencing the high rate of adoption in London and the south-east. Both Apple Pay and Android Pay are accepted by the capital’s contactless scanners as an alternative to Oyster cards, with Transport for London reporting last year that more than 3.2 million journeys used mobile payments in the first six months following their introduction.

Could smartphones be the new wallets?

The increasing use of digital wallets such as Apple Pay and Android Pay to make in-store purchases may indicate that many people are rethinking their attitude to payments, and the traditional wallet may be on the way out.

In many circumstances, the ability to make low-value purchases via a smartphone may mean more options for consumers. For example, if an individual goes for a morning jog, they’re likely to take a smartphone anyway to listen to music and track their progress, but they may consider taking a wallet as well to be an inconvenience. However, with mobile tap and pay, they could easily pick up a drink on their run without having to worry about this.

James Frost, UK chief marketing officer at Worldpay, said: “Already more than half of UK shoppers say they’d happily leave their wallet at home and pay for everything on their smartphone instead.”

He added that the rise of contactless cards has paved the way for mobile NFC capabilities, with the technology benefiting from significant investment in infrastructure and growing familiarity among consumers.

“Today one in five of us will use the technology at least once a day, rising to a third of people in London,” he said. “As people get more used to paying for goods on their smartphone, mobile’s ability to bridge more effectively across online and offline retail channels will increasingly threaten the future of the traditional payment card.”

While Worldpay’s research showed how contactless technology has been enthusiastically adopted in the UK, other nations are set to follow suit in the coming years. Markets including Canada, Australia, the Czech Republic and Poland are all rapidly taking to contactless, so perhaps they’ll be the next places where paying with your mobile will take off.

Written by Andy Brown

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.

Read more articles from Andy Brown