Contactless payments are growing in popularity. In June 2015, 81 million contactless transactions were made; representing growth over the year of 240 per cent, and more than £560 million was spent using the technology.
Indeed, earlier this year we learnt how cashless payments have over-taken (opens in new tab) the use of notes and coins in terms of transaction volume.
Contactless transactions have been driven by three key developments – a continued shift to internet shopping; the appearance of new, additional payment options; and increased consumer comfort in using alternative payment options. They are now accepted in more places than ever, including supermarkets, post offices and on public transport. The latest development in contactless payments in Britain has been the increase in transaction limits from £20 to £30, which commenced in September 2015.
Contactless payments appeal because consumers want to use payment mechanisms which are quick and easy and which integrate with established personal behaviours and practices. At the same time, merchants want payment mechanisms that are speedy and cheap to implement and that can offer the potential to improve customer insight.
Consequently, at Fujitsu, we expect growth in Britain in the number of contactless transactions to continue to grow. Regulatory changes under consideration in other markets make accelerate take-up of alternative payment mechanisms elsewhere, too – for example, Denmark is considering legislation which would remove the requirement for merchants to accept cash payments, which – if passed – could be implemented from as early as January 2016. If such a proposal were implemented, the number of cash transactions is likely to decline further and rap payment vehicles – with other payment mechanisms, including contactless – benefiting as a result.
Of course, contactless transactions will not appeal to everyone. According to Which? (opens in new tab), contactless technology allows thieves to steal money too easily, simply by passing a card across a scanner. The payments industry counters this argument, highlighting that the technology is more secure than carrying cash; that each individual payment is made using unique cryptograms; and that transactions are limited to £30, with users being asked to verify their identify, by inserting their PIN, from time-to-time. The industry will continue to argue that it must continue its twin strategies of deploying state-of-the-art security while communicating details of its risk mitigation approaches to both current and prospective users.
Contactless payments are now entering the next stage of development. We expect to see them continue to be predominately plastic card base, but also migrate to mobile telephones, as Apple Pay, launched in Britain in July 2015, is joined by Google Pay and Samsung Pay.
We further expect interest in wearable technologies, such as smart watches, to continue. We expect that the overall impact will be for contactless payments to become increasingly entwined in our daily lives.
Anthony Duffy, Director of Retail Banking, UK & Ireland, Fujitsu (opens in new tab)