UK contactless payments; minimum amount drop, maximum amount rises
September in the UK will see the start of a couple of changes to contactless payment transactions as this payment method continues to find increasing acceptance, both with consumers and merchants.
The first change is that, from tomorrow, 1st September, consumers will be able to to spend up to £30 using their contactless credit or debit cards. Currently, the most one can spend in a single transaction is £20. ‘With more customers carrying contactless cards and more shops taking contactless payments, it was felt increasing the limit to £30 would benefit shoppers and retailers. The average supermarket shop is £25, and increasing the limit from £20 to £30 will give customers more opportunities to use contactless cards to pay for their everyday purchases,’ said Richard Koch from the UK Cards Association.
There are also plans to make contactless payment acceptance compulsory by 2020, meaning that the tap and go era will be finally embedded into everyday shoppers’ lives. This, it is hoped, will lead to the end of the dreary £5 minimum spend currently placed on card payments in some establishments. "The compulsory introduction of tap and go payments in 2020 will discourage retailers from imposing a £5 minimum spend on card payments. Pubs and convenience stores especially are less likely impose a minimum spend on contactless payments is because it helps them cut queuing time and make more sales,” added Koch.
About time, too. Last week, the latest contactless payment figures demonstrated an explosive take-up of contactless payments. Barclaycard, which processes nearly half of all credit and debit card transactions in the UK, saw the amount consumers spent using contactless payments soar 150%, with the number of transactions rising 134%. MasterCard also reported that spending by British consumers on their contactless cards has increased more than five-fold in the last 12 months, according to their latest UK spending data. Cardholders have driven 560% year-on-year growth in the value of transactions, up from a 373% increase in the year to July 2014, showing that the adoption of contactless payments is continuing to accelerate.
The number of contactless card transactions made with MasterCard have already quadrupled since last summer (457%). At the start of 2012, the year in which the limit was raised to £20, the average contactless purchase by cardholders was for £4.52. In July this year that had increased to £7.29, a good indication of the need to raise the contactless limit to £30. Mark Barnett, President of MasterCard UK & Ireland said, “The pace of growth we are seeing in contactless is getting ever faster as we rely less and less on cash. Consumers enjoy the speed and convenience of tapping to pay. We expect this upward trend to persist with consumers continuing to migrate to contactless card payments and increasingly to mobile payments, as we work with partners such as Apple to enable more convenient ways to pay.” MasterCard’s data also shows that each year since 2012, individual cardholders have on average doubled the number of times they tap to pay, indicating more confidence among consumers and ever increasing acceptance of contactless by retailers.
Barclaycard figures also show that almost six in ten shoppers (57%) intend to take advantage of the limit increase to £30 by upping their contactless usage, suggesting that the speed and convenience of ‘touch and go’ payments is becoming increasingly popular among consumers. Barclaycard head of contactless Tami Hargreaves said, “From the credit card to chip and Pin, to contactless and mobile payments, Brits are renowned as fast adopters of new technologies. Over the next year we expect the limit increase alongside the forthcoming launch of High Value Payments – where contactless transactions over £30 can be made using a mobile device combined with chip and Pin authorisation – to drive this growth even further.”
Looking at mobile payments, we reported that there was speculation that the 26th August was going to be launch date for Android pay. This did not happen. Instead the Android site is going on record by saying the payment technology is ‘coming soon’. How very unlike Google to take their time! Samsung Pay, on the other hand is currently being beta-tested in the U.S. For now, the beta is selectively open to device owners with credit and debit cards from US Bank and Bank of America, according to the blog Droid Life. Samsung is expected to formally launch the new payment feature on September 28, 2015.
Finally, time is drawing short on the Contactless Britannia Roundtable, taking place on October 14, 2015. We have a couple of seats at the table still open so please, if you are looking to discover how contactless technology could be making a difference in some of the major town and cities in the UK (loyalty, parking, beacons, payment, transport etc), get in touch. From the industry side we already have the likes of NXP, Creditcall, The UK Cards Association, Neology and Helixion, to name but a few of the technology representatives at the table, so if you have an interest, speak to us soon or visit the site to find out more.
Until next time,
Steve Atkins
Contactless Intelligence
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