Brits vs. Danes in “First to go cashless”
In last week’s editorial I mentioned the current Danish Government and its attempts to push future economic reforms in Denmark by becoming a cashless society. The first in Europe as it so happens. However, this week, not to be outdone, Payments processor Worldpay was quick to point to their 2014 insight report saying that the UK could, in fact, beat Denmark to that title. It’s probably the residual effect of election fever. One majority government later and the UK feels it can take on everyone!
Worldpay say that their latest data continues to show a trend that we at Contactless Intelligence have reported on numerous times. Namely that there is a significant shift in the way British consumers are paying for goods, with high street credit and debit card transactions rising just over 6% in 2014, following similar gains the previous year. Londoners are responsible for the single biggest year on year rise in card spending. Transaction volumes on credit and debit cards in the Capital have risen by 9.3% in the past year. Cosmopolitan Leeds is not far behind, however, with card-based payments rising by 8.9% in 2014, while Reading (8.0%), Southampton (7.9%), and Liverpool (7.7%) are also creeping towards the cashless tipping point.
Worldpay believes a migration of low value cash payments to card, alongside increasing use of contactless, is pushing the UK closer to the point where cards overtake cash as the dominant payment method on the High Street. Recent data from the British Retail Consortium suggests cash use is down by 14% over the past five years across the UK. Worldpay’s claims are backed by its data which shows a steady decline in average transaction values for credit and debit cards, from £31.51 in 2012, to £29.67 in 2014, an overall drop of 6%. In the fast-growing contactless sector meanwhile, where the number of transactions processed has risen by 150% in the last six months, transaction values have levelled out at around £7.24.
In the UK, where according to the UK Cards Association there were nearly 37 million contactless cards in circulation by the end of last year, contactless transactions rose from 11.2 million to 40.5 million, fuelled in part by the continuing rise in supporting infrastructure (there are now over 215,000 contactless terminals across the country).
Further research by the processing company on 2,000 consumers found that the majority of those questioned who were over 45 were still likely to have cash on them (including myself - *hangs head in shame*) but nearly 60% cent of 25-to-34-year-olds would prefer to never carry cash. “Shoppers don’t want to worry about having enough cash in their wallets. Whether they’re spending a leisurely day out hitting every shop on the high street or popping into a cafe for a quick latte, they just want payments to be fast, simple and convenient,” said managing director, Worldpay UK, Dave Hobday. “This is where card payments have the edge over cash, time and time again. It might not quite be curtains for cash just yet, but notes and coins are starting look like they belong to a different time.”
Never was there a more perfect set of data structures and press release quotes aimed at making the statement - if the Danes can go cashless - so can we. I personally would have gone for “Great Britain. Probably the best cashless economy in the world.”
Talking of money, it would be remiss of me if I didn’t mention a little story making the rounds this last week. Namely, that Visa Inc is looking to acquire (re-acquire?) Visa Europe.
Speculation began with Bloomberg reporting that negotiations between the two payment firms are at an ‘exceptionally early and tentative stage.’ One of the potential stumbling blocks regarding the deal is the price. Advisers for both groups are visualising different estimates, with Visa rumoured to be valuing the deal at $15bn, and Visa Europe expecting a sum closer to $20bn. Despite the potential pitfalls, observers are forecasting that the negotiations are very likely to prove successful. Bloomberg says that the 3000 European banks that own Visa Europe have put in an option that would force Visa into buying back the company. This option is rumoured to expire in the next nine months. For the option to go ahead, 80 per cent of Visa Europe’s board would have to agree to the deal.
Analysts regularly ask Visa about the prospect. “It’s a consistent question,” Visa Chief Executive Officer Charlie Scharf said last month in an earnings call. “Until they get 80 percent, then it’s not going to happen. So I really don’t know.” Visa Inc. would like to fold Visa Europe into the larger company at the earliest possible time, Scharf said in March 2014 at an investor conference. “Over the long term, we absolutely would love Visa Europe to be part of the company,” Scharf said. “It just to us makes extraordinary amount of sense. Sooner is better.”
Talking of payment for company acquisition, there are reports coming out of South Korea that Samsung paid $250m for LoopPay, although there has been no real insight into the specifics of the acquisition financially. Earlier in the year, it was confirmed that Samsung acquired payments start-up LoopPay in an attempt to rival Apple and Google in the mobile payments sector, but no official figure was confirmed. ‘‘Our vision of inspiring consumers to transition from a physical wallet to a truly digital wallet will continue. I’m most excited that Samsung shares this vision and has chosen to help change how we shop and pay for goods and services,’’ said Will Graylin, CEO of LoopPay during the announcement of the sale. ‘‘This acquisition accelerates our vision to drive and lead innovation in the world of mobile commerce. Our goal has always been to build the smartest, most secure, user-friendly mobile wallet experience, and we are delighted to welcome LoopPay to take us closer to this goal,’’ stated JK Shin, president of IT and mobile division at Samsung. Since the news of the payment, both parties have remained tight lipped.
Quite right, too. My mother always taught us it is was not the done thing to talk about money - no matter the amount. I’m not sure it counts when you need a topic for an editorial though…
Steve Atkins
Contactless Intelligence
