The UK continues to embrace contactless card payments according to recent data released by Barclaycard, which says year-on-year spending using the technology in the region is up 134% by volume in the past 12 months. Not only are consumers using ‘tap and pay’ cards to make more payments, they’re using them for larger amounts, with Barclaycard claiming its customers’ spend by value is up 150% in the same period. The numbers come as MasterCard also releases impressive numbers, claiming UK contactless payments made with its cards are up 560% by value in the past 12 months. It says that by number, the volume of transactions has quadrupled since last summer. The promising numbers come as the cap on contactless payments climbs from GBP20 (USD31) to GBP30 (USD46) in the UK as of September, suggesting the value of contactless payments in the region is only going to rise.
As the concept of contactless payments becomes more embedded in everyday life, this also paves the way for the next jump: contactless payments on mobile phones.
London continues to be touted as the fintech centre of Europe. Yet that’s not where the fastest growth in contactless spending is happening according to Barclaycard, which says that’s happening in the city of Leeds. The firm claims consumers there are spending 211% more this year than last, with Blackpool, Newcastle, Manchester and Edinburgh all seeing 190% growth and higher. Unsurprisingly, London still leads adoption with 40% of payments that could be contactless being made using the technology – up from 30% last year.
There are also signs that contactless payments are being used by older consumers, with half of consumers using Barclaycard contactless now aged 50 or older and a fifth aged 65 or older. As adoption becomes more common place, this means it’s likely the value of spending will continue to soar. Indeed, the new report from Barclaycard says 57% of those polled say the increase means they will spend more using this method.
Transport, Supermarkets & Everyday Payments
Part of the process of on-boarding consumers to new payment technology is building out the infrastructure to support them and then making it very visible. The high penetration of contactless payments in London, is in large part down to the city’s transport authority, TFL, which controls the underground, trains and buses, making a big push on payments last year. While the body’s decision to scrap cash on buses is controversial, it appears to have played a part in forcing consumers to use their credit or debit cards to make payments. With prepaid Oyster cards already mainstream, it’s not such a huge jump for passengers to pay with a card.
But according to the report it’s supermarkets picking up the biggest volume of contactless spending, representing 29% of transactions. With the average shop costing GBP23 (USD35), Barclays expects the higher cap to significantly boost the number of contactless payments happening in store.
In June Barclaycard expanded its range of bPay wearable devices, unveiling a new wristband as well as a fob and a sticker, which can be used to make contactless payments at more than 300,000 terminals across the UK. And during the busy Christmas shopping period last year, Barclaycard also trialled contactless payment gloves, enabling shoppers to ‘touch and go’ by waving their hand in front of a contactless point of sale.
“In the 50 years that we’ve been in business, we’ve seen consumers adopt many innovations in payments that have become part of our everyday lives,” says Barclaycard head of contactless Tami Hargreaves. “From the credit card to Chip and PIN to contactless and mobile payments, Brits are renowned as fast adopters of new technologies that make our lives easier. Our data underlines this trend and shows that ‘touch and go’ is fast becoming a favourite way to pay as both shoppers and retailers value the speed and ease it brings.”
Next Up: Mobile
It is this base level of acceptance of contactless payments that is necessary for mobile wallet transactions to have any chance of becoming mainstream. It’s still a relatively big leap of faith, but it stands to reason that consumers will be more likely to try out ‘wave and pay’ transactions with their mobile phones if they’re accustomed to doing the same sort of thing with a credit or debit card. Apple Pay is currently rolling out slowly in the country, now available to customers of banks including Natwest, Nationwide, RBS and Ulster Bank. As with contactless cards, public transport, supermarkets and other retailers where shoppers make everyday (often small) payments will play a big role in driving adoption. Places where shoppers can use the service in the UK range from the Post Office and TFL to BP petrol garages, supermarket Lidl and high street food chains including Pret, Subway and Starbucks. While adoption numbers of Apple Pay are scarce, the infrastructure is now falling into place for mobile payments to take off – although widespread uptake is likely to take some time yet.
The personal touch is going to be key to the success of fintech. That’s the view of Nutmeg’s former CEO Nick Hungerford and Zopa’s CMO Amy Miller speaking at the Shift Technology conference.
Another week, another online lender laying off staff. This time it’s Avant, formerly AvantCredit, which is cutting 7% of its workforce after its loan volume fell 27% in the first three months of the year.
Despite the rapid spread of contactless and digital payments services, hard cash remains a tenacious and often unwanted element in modern society. Many of us will be familiar with the pang of irritation that comes when a shop doesn’t support contactless payment and with the despondent trek to a cashpoint that follows.
Free banking is a myth. All companies need to make money and all too often in finance this involves hidden charges.