Contactless payments status: end of the road or the beginning of the next stage?
The news site Pymnts.com, together with analytics firm InfoScout, led a survey of 1,498 iPhone 6 users as part of their third report on Apple Pay. Their findings suggest that just 3% of US iPhone 6 owners regularly use Apple's contactless payment system to buy products in stores and that just 13.1% of them had used the Apple's payments system, down from 15.1% in March. 23% said they had used Apple Pay when they were surveyed, compared with 39.3% in March.
When asked why they didn't use Apple Pay, nearly a third of those surveyed said they were happy with their current payment method (credit and debit cards or cash). Worse, 34% said they didn't know how the new system worked. After years working and reporting on the contactless payment industry you may think that I would find these kind of results disappointing. But, funnily enough, I don’t. For a start, this is a US survey with a smallish survey number and, pardon me for saying this, but I actually consider that our American cousin may be a little behind the curve when it comes to accepting alternative payment methods.
This is not the case in Europe. Each week we are bombarded with reports concerning new areas of possible contactless payments that are being opened up. Interestingly, many of these payment areas are being pushed by central or local government or other centralised organisations. Only a few weeks ago the news was out that mobile contactless payments could be coming to market stalls on the streets of London with the launch of a £20m London Regeneration Fund to encourage new ideas. The Mayor hopes technology innovators will work with local authorities and traders to develop a new contactless payment system for market stalls.
“Our dynamic high streets are teeming with economic activity and bristling with creative minds but we need to make sure they are equipped to meet the demands of our ever-changing city. This fund will take everything that is so good about our local town centres and fuse it with ground-breaking technology and innovation to create high streets that will power our economy for years to come,” said Mayor of London Boris Johnson. To launch the campaign, the Mayor’s Office is hosting a ‘Regen Bootcamp’ with ‘open ideas’ sessions that will see designers, architects, tech innovators and social entrepreneurs collaborate with local authorities, community and business organisations to thrash out innovative ideas to support London’s high streets and places of work – including the acceptance of contactless payments for market stallholders through mPOS terminals. And why not? It makes perfect sense with the acceptance for contactless payment transactions at an all-time high.
Even new research from YouGov has found 75% of UK consumers say black taxis should accept contactless payments. Commenting on this, Dave Hobday, UK Managing Director, Worldpay, said, “The very idea of paying for transport in London with cash is a thing of the past and throughout the economy businesses that fail to offer card payments are rapidly losing out to their more savvy, technologically advanced competitors. People now expect to be able to book, track and pay for their cabs at the touch of a button. Black cabs are one of the last bastions of the cash-only economy and they need to find a way to stay relevant against increasingly popular alternatives. Digital transformation is creating huge disruption across every industry and, while accepting card payments is a step in the right direction for London’s cabbies, there may be a few bumps in the road for them yet.”
“The regeneration fund is an example of the London Mayor’s commitment to innovation following on from the successful contactless roll-out with TfL and the acceptance by consumers for contactless payments,” commented Guy Douglas, Digital High Street Consultant. “The Regeneration Fund launch was attended by all of the London regeneration experts, where there was a real interest in the online, mobile and contactless sectors and what they could do for the regeneration of Britain’s high streets.”
However, one payment area that I feel will expand over the next year may be a distant relation to contactless payments but remains contactless in the truest sense of the word. This payment area is Card on File – found in many applications that are available to the consumer today. Consumers are increasingly looking to mobile apps for their content and commerce needs. Recent research shows that app use has soared with the number of regular app users, or those who use apps between one and 16 times per day, up 25% from Q1 in 2014 to nearly 1 billion people. The number of ‘super users’, or those who access apps between 16 and 60 times per day, has jumped 34% to 590 million. With other in-app payment methods already launched or set for launch, including Android Pay and Samsung Pay, this means there’s a significant amount of app users who’ll be able to take advantage of quicker, more seamless payments via mobile (and we are not just talking about Uber!).
The scale of barriers to adoption for in-store mobile payments and in-app mobile payments can be fairly substantial. However, with smartphone penetration expanding and Wifi and 4G becoming more ubiquitous it is easy to imagine that many people will be happy to pay for their goods using their smartphone as their own personal payment point. “The real excitement with Apple Pay is that it has made payments within apps quicker and more secure, enabling consumers to get what they want, when they want it, in as little as a single touch. The future of payments is almost certainly mobile and the present is increasingly in-app,” wrote Dennis Jones, CEO of Judo Payments in a recent Payment Source article, titled, “In-App Payments Are the Real Future of Mobile”. Expect to see more on this topic in the very near future.
Finally, not so good news for the public transport travelling citizens of Manchester or, indeed, IT services firm Atos. Transport for Greater Manchester (TfGM) has terminated its contract with the company responsible for rolling out a smart ticketing system after delays. Atos was contracted in 2012 to design, build and operate the 'Get me there' scheme. However, last week, TgGM said it was "clear that Atos cannot deliver" the system and ended the deal. Smart ticketing was introduced in October on Metrolink, but only to those with concessionary travel passes.
It was set to be rolled out to tram and bus passengers this year, with hopes to extend it further to rail travel.
In a joint statement, the transport body and Atos said the development and launch of the 'Get me there' system will continue, but with alternative suppliers. A TfGM spokesman said: "Today's smart card already looks destined to be overtaken by contactless payments and mobile apps on smart phones. Given TfGM's commitment to deliver an integrated smart ticketing scheme, and with the opportunities afforded to us by the forthcoming Buses Bill, it is only right that TfGM re-thinks its approach to the 'Get me there' scheme to ensure that it is flexible and fit for the future."
And so it’s back to the drawing board with, I am sure, no shortage of candidates looking to replace Atos in the process. You know who you are, and can we talk talk to you about attending the Contactless Britannia Roundtable in October? We'll be in touch…
Until next time,
Steve Atkins
Contactless Intelligence
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