When the term “the death of cash” first started circulating in the payments industry, the future for coin and paper payments was perhaps not quite as bleak as some suggested. But over recent years, as chip and pin has pioneered the move away from cash payments, we’re seeing innovation pushing cash further and further down the value chain.
In the last year we’ve seen a significant increase in the use of contactless payments across Europe. In 2013, UK consumers used their Visa contactless cards to make close to 100 million individual purchases (reaching 94 million), compared to fewer than 25 million contactless purchases in 2012. Growth is accelerating as consumers are becoming increasingly aware of how contactless works, and more and more retailers are installing contactless payment terminals. Even so, the UK is not the quickest European country to embrace contactless, with Polish consumers making 158.7 million contactless purchases last year alone.
In the UK, spend has risen to over £618 million in 2013, with £82 million being spent in December alone. An average contactless purchase is £6.09. Coupled with the fact that every issuer in the UK now offers Visa contactless cards and 34.6 million are now in circulation amongst UK consumers, 2013 was a milestone year.
By the end of 2013, there were over 300,000 terminals in the UK capable of accepting contactless payments. This had risen by almost 200% from 2012, with both large retailers (including M&S, Waitrose, Starbucks, Costa, Co-Op, Lidl, McDonalds and Boots) and independent retailers making contactless payments available to customers.
Julian Potter, the General Manager at Baytree Interiors told us that the company has benefitted from the ease of accepting small payments that contactless encourages. “Although still a fairly new way to pay, we have seen a number of customers use this technology, for small payments in store. It’s not just coffee shops and newsagents that can benefit from this, any retailer can,” he said.
“It’s certainly becoming a more popular payment method for amounts under £20 which is the limit you can pay up to. Our staff have noticed an increasing number of customers choosing this option, even as a home interiors store we sell a number of items under this threshold, which makes this technology ideal for us.”
Londoners have also taken to contactless travel with more than 11 million contactless journeys being made on London Buses using Visa contactless cards since the service launched. Due in part to the rise of contactless payments on the buses, which now account for more than 50% of what had previously been cash fares, Transport for London will stop accepting cash fares on London Buses from July 2014, in order to reduce operating overheads and cut boarding times.
The use of contactless for travel will rise even further in the UK later this year with the expansion of contactless acceptance across the rest of Transport for London’s network (including the Tube, DLR, tram, Overground and many National Rail services).
Despite the rapid successes of contactless payment technology, there is still more to be done if we are to realise the same level of increases in 2014. For instance, For instance, the visibility of contactless in stores can be significantly improved as it is often not obvious to consumers that many of their favourite shops offer contactless payment s.
And, while major retailers have benefitted from quicker payments as a result of accepting contactless payments, brands must ensure that staff are in a position to encourage their use. If this is done, consumers will inevitably benefit from the speed and convenience of contactless.
Nonetheless, growth continues at pace and we expect to see significant growth in 2014, following up on the successes of last year.
Where cash was king before, convenience, ease and speed are the new royalty – with contactless wearing the crown.
By Mark Austin, Director of Contactless, Visa Europe