Contactless creeps up on cash faster than ever
Contactless payments are now a normal part of our daily life.
2014 was the year it really took hold of the market, thanks to major projects such as that implemented by TFL, and the continued rollout in stores and other payment terminals.
The Payments Council recently predicted that in 2015, the volume of cash payments in the UK would finally fall below non-cash transactions. Now that’s a huge deal!
The numbers don’t lie: according to the UK Cards Association in May 2015, consumers typically made 10 contactless payments every second in 2014, spending a total of £2.32 billion. Further, the UK Cards Association raised the contactless £20 limit to £30 in February 2015 – partially attributed to the fact that the average debit/card card spend on groceries in a supermarket is just over £25.
It is a sign of real progress in the payments sector that contactless can now challenge the popular TFL Oyster card, but not all of the UK’s banking institutions have been quick to embrace the method that is posing a real alternative to cash. While Barclays and TSB have been quick to adopt, others have been cautious.
The mass-market introduction of contactless technology has encouraged the payments industry to shift gears towards convenience and cost saving; consumers and retailers alike are realising the benefits in terms of higher levels of autonomy, convenience and price for consumers and higher turnover for retailers. And these benefits are only really the beginning.
There is a clear migration of low-value cash payments to card ones, where cards can challenge as the dominant payment method on high street – the UK public has become accustomed to paying for coffee, quick bites to eat, or the daily paper with a contactless card, which has in turn brought down the average transaction values for card payments overall. The typically slow and long learning period where users build up trust in new technology, is noticeably faster in the medium-term. It seems that when it comes to lifestyle technology adoption, convenience wins out every time.
In the long term, contactless cards and tokens enable merchants and issuers to collaborate on lifestyle products, and marry the features of security and convenience. In this way providers can pander to the preferences of today’s consumers, catering for both the banking and non-banking facets of their lives with value-added applications.
Contactless payments offer a safe and convenient way to pay that not only provides benefits to consumers, retailers and providers, but also opens the door to new form factors and related value-added applications. The system has allowed creativity and distinction to prosper on the foundations of the mature card industry.