Contactless payments technology has come a long way in the last few years, particularly in markets such as the UK, where strong efforts have been made to embrace the technology and provide the necessary supporting infrastructure.
According to the UK Cards Association, there were 108.4 million debit and credit cards in use in the UK as of April 2017, supporting 416.3 million contactless transactions worth £3.9 billion a month.
But even though transaction volumes around the world have risen hugely in the last two to three years, the technology may be older than you think. In fact, it has now been ten years since the very first contactless cards were introduced to the UK.
These first ‘tap-and-go’ cards, as they were then called, were offered by Barclaycard in September 2007 and could be used at just 1,000 terminals around London during the trial. But by April this year, there were 491,084 bank-owned terminals in the UK able to accept contactless payments – quite the rapid rise.
The reasons behind the rise
Barclaycard highlighted several reasons why contactless payments have become the first choice for so many consumers, and the added convenience of the technology is a key factor. It stated that using a contactless payment saves seven seconds when compared to a chip-and-PIN card payment, and 15 seconds as opposed to cash.
It may not sound like much, but for busy consumers, it can quickly add up. In fact, the card provider estimates that these time savings will work out to 141 million hours between 2017 and 2021, equating to £967 million in economic value.
Of course, the time saved isn’t just limited to the few seconds the actual transaction takes, as the technology can also cut down on queueing. More than a quarter of consumers (27 percent) say they’ve spent less time waiting in line as a result of contactless, with 52 percent being served more quickly at the checkout.
Tami Hargreaves, director of innovation and partnerships at Barclaycard Mobile Payments, commented: “As the old adage goes, ‘time is money’, and since introducing contactless to the UK ten years ago, we’ve seen Brits embrace the technology in their droves. And with speed, security and convenience all being so important for shoppers, it’s not surprising that contactless is quickly becoming the most popular way to pay.”
What the future may hold
So where next for the technology? One thing that seems certain is there’s still a lot of potential for growth, as more consumers and merchants gain awareness of the payment method’s benefits. In fact, Barclaycard estimates that the sector is poised to see an increase of 317 percent by 2021 in terms of the volume of transactions.
Yet despite this clear demand, the company noted that half of retailers in the UK still don’t accept contactless payments, and it is here where efforts will have to be made if the potential of the technology is to be realized. In today’s environment, consumers value payment choice highly, and will be frustrated if they find themselves unable to use their preferred method in a store.
Barclaycard suggested a lack of awareness among merchants about the speed of contactless payments is holding many back, with almost half of businesses (47 percent) underestimating how much time they could save. But as retailers who accept contactless have seen their number of sales increase by an average of 30 per cent, the advantages are obvious.
As the technology’s popularity grows, another key step may be to raise limits on payments. Many countries set a maximum value that can be paid for via contactless as an additional security step – in the UK, for example, it currently stands at £30.
But many retailers would like to see this increased. Over half (53 per cent) support an increase due to the productivity and sales gains they’ve enjoyed, with 37 per cent calling for a £50 limit and one in five (20 per cent) wanting to see a £100 cap.
Elsewhere in the world, contactless transactions can be made in conjunction with entering a PIN, so there is a second level of authentication where the transaction is of a higher value. In Australia, for example, a PIN is entered where the contactless transaction is over AU$100 (about £60), so now over 75 percent of face to face transactions are contactless, while other markets like Poland have seen similar high take up once limits are removed. So it should be possible to take the contactless much further in the UK market.