Contactless was almost in the dictionary - is it now mainstream?
Something strange has happened since last summer - contactless appears to have picked up steam. To the point where one could, if required, make a compelling argument that the technology has become mainstream. I’m not talking so much about mobile payments and the like - more the use of the contactless cards and the general implementation and acceptance of the technology itself.
After all, the word ‘contactless’ made the Oxford Dictionaries’ shortlist for international word of the year. Contactless was one of seven words to make the list but ultimately lost out on the top spot to ‘vape’, which refers to electronic cigarettes. Explaining its decision to recognise the word, Oxford Dictionaries says that there has been a corresponding rise in usage, with a peak in September when the technology was adopted across London’s transport network and Apple Pay was unveiled. For me, losing out to ‘vape’ doesn’t matter so much than the fact ‘contactless’ was even considered. That is evidence enough for me that the industry has moved on.
Not to be outdone on this word game, MasterCard too offered up it’s five buzzwords last week. Says Jennifer Stalzer of MasterCard on the companies blog, “We are geeking out over the fact that payments lingo is going mainstream. In our view, there are a variety of up-and-coming buzzwords to look out for in 2015 that are worthy of new or broadened definitions themselves (we’re looking at you, Oxford Dictionaries!). The words were tokenisation, chip card, digital wallet, hackathon, and biometrics. Chip card and biometrics - buzzwords in 2015? For IC veterans such ourselves, that’s nearly cringeworthy!
So what’s got everyone so giddy with excitement all of a sudden? Well, it could well be that a slew of reports were released last week that showed a clear upswing in the use of contactless payments. First, a Forrester report had the following to say; “The media frenzy around mobile payments — most recently Apple Pay — has reached fever pitch and led some industry spectators to conclude that a payments revolution is at hand. Not so. The adoption of mobile payments is an evolution — not a revolution — and the evolution is well underway. Although the landscape of mobile payment providers is in an ongoing state of flux, the ecosystem and mobile capabilities are maturing and consumer and merchant adoption is accelerating. Over the next five years, US mobile payments will grow to $142 billion”. Wow! That is a BIG number in a short timeframe. But the good news doesn’t seem to stop there.
Next came the news that Transport for London had released figures that show more than 12 million public transport journeys had been made using contactless payment cards and devices since TfL initiated contactless payments on their public transport services last September. Contactless already represents close to 8% of all pay-as-you-go journeys on the network, TfL said, with one million journeys being paid for with a contactless card in the first ten days after the launch.
Following on from the TfL report, payment processing company Worldpay reported a 150% rise in volume over the past six months. The company says it handled 16.69 million contactless transaction in October compared to just 6.65 million in April this year. In total, Worldpay says that UK contactless transactions have passed £1billion with total transaction volumes using contactless increasing by 1591% in the past two years and that contactless transactions had increased by more than 150% in the last six months. According to the report, supermarkets dominate the ‘tap and go’ payments market, accounting for 44% of all contactless transactions and that fast food outlets have also taken to contactless in significant numbers, processing a quarter (24%) of all transactions.
Dave Hobday, Managing Director of Worldpay UK, commented, “Contactless is really a no-brainer for businesses that process a significant number of low-value transactions. It keeps customers happy by making their lives easy, and it helps staff make as many sales as possible during peak times. While this is still a relatively new market with just 18% of Brits claiming to possess a contactless card that they use regularly, it is phenomenal how quickly the technology is moving from nice to have to a must in sectors like hospitality, food, entertainment and retail. Any retailer still on the side-lines is going to end up a step behind their competitors and missing out on ‘tap and go’ trade.”
This information is backed up by a report that came out a few months last september from the UK Cards Association that reported the total number of retail purchases on cards rose by 0.4%, while it fell by 0.3% for all spending. Similarly, spending by retail value rose by 0.2% to £23.3 billion on cards, but fell by 0.6%t to £30.9 billion for all spending. These figures reinforce the trend that consumers are relying more and more on cards over cash – even in an environment where overall retail spending is slowing down. Richard Koch, head of policy at The UK Cards Association said, “The move from cash to card is becoming more and more evident. People are now using their card even for small purchases when they once would have used the change in their pockets. Contactless cards have helped to accelerate this change in behaviour as more consumers begin to see the benefits and simplicity of using contactless technology.”
I like to think that with the increasing acceptance of contactless technology in payments, certainly in the UK, we will start to see a adoption of contactless technology into other everyday applications. That’s when I would really accept that the technology has gone ‘mainstream’. Opinions, anyone?
Until next week.
Steve Atkins
Contactless Intelligence
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