Figures from merchant services company Worldpay Inc show that for the first time, more payments were made in UK shops using contactless than Chip and PIN over the 12 months from June 2017.
Jump This Year
Worldpay reports a 30% rise in contactless payments over the last year. A MasterCard survey from September concurs with the trend found by Worldpay by showing that nearly half of all UK payments (including cash) were contactless-enabled.
Big Rises – Fashion Retail
According to the survey, fashion retailers (415% year-on-year increase in contactless payments), and even betting shops have seen large increases in contactless payments, particularly using smart-phones. Clothes and footwear sales have seen a 500% increase in contactless payments from smart-phones.
Benefits
For the card user, contactless payments offer greater convenience because of the speed and ease of transactions. As well as providing positive reinforcement, contactless also allows people to avoid the negative aspects of shopping, such as eliminating the need to obtain and carry cash, and avoiding queuing and lost time waiting to pay.
For the retailer, contactless means cost and time savings, and having to deal with less cash, but it also means the need to invest heavily in new payments technology in order to make it easier and quicker for customers to securely complete transactions in-store.
Drivers
Drivers of the growth in contactless have been the convenience and speed that customers experience, the fact that card issuers are including contactless with customer cards, and the fact that most retailers are able and are happy to take contactless payments, even for relatively small amounts.
Also, one of the key drivers for contactless payments via smart-phones has been the rise in the use of mobile wallets e.g. Apple Pay, Samsung Pay and Google Pay, which have seen a 114% increase on the high street over the last year. In fact, another Worldpay survey from last year revealed that over 50% of shoppers believe that their phones could replace their wallets within the next five years. This also illustrates how we, as consumers, are using our smart-phones to help manage more and more important areas of our lives.
There has also been a big increase in confidence and trust in contactless by consumers as they have become used to using contactless on a regular basis without experiencing any of the initially predicted negative consequences. Confidence levels in the marketplace can be illustrated not just by the huge increase in the number of transactions, but also by the fact that in a Worldpay Survey, also from 2017, 65% of consumers said they’d happily make a contactless purchase of up to £50, instead of the current £30.
What Does This Mean For Your Business?
This is another milestone in the rise of contactless that illustrates the main payment trends in the market. Firstly, back in June, UK Finance announced that, driven by contactless, the number of debit card payments had overtaken those of cash. Now we are at the stage where not only has contactless overtaken Chip & PIN for the first time, but contactless using smart-phone wallets is seriously on the rise. Contactless provides speed and convenience for customers as well as retailers. There are even some traditionally cash-based businesses in cities e.g. cafes, that only accept contactless and not cash. It is now possible to imagine a time in the not-too-distant future where wallets are no longer needed to carry cash, and tills (for holding cash) and ATMs with just a cash dispensing function starting to become much scarcer. Convenience and speed have always been desirable for consumers when shopping, and contactless allows retailers to offer those benefits for most of our daily purchases.