GUEST OPINION: Contactless. NOT the Emperor’s new clothes

by Gregor Rankin, Head of Marketing, Northern Europe, Ingenico


There has been a flurry of debate around contactless payments recently: Visa has recently announced that it will be increasing its contactless card issuance this year to 12 million, versus Datamonitor’s recent research which found that card issuers, other than Barclaycard, and retailers have been slow to invest in contactless technology. The spotlight is once again on this new form of payment and whether it will be a case of the emperor’s new clothes.

Whilst uptake has perhaps understandably been slower for smaller retailers, it has been used to great success in a number of larger retailers, who have greatly benefited from contactless’ queue-busting benefits. Chains such as Pret A Manger, EAT and Cafe Nero have implemented the technology to great success. Early adopters have experienced an increased average spend of up to 33%*, in addition to substantially faster transaction times and higher footfall, which has shown that there are substantial benefits to be gained.

The key in the near future will be to maximise low value transactions – with nearly 80% of all transactions under £10, outlets such as Pret A Manger, where quick turnarounds are essential to the business, will be a key proving ground for contactless. The increase of the contactless payment limit to £15 in February 2010 gave contactless adoption a shot-in-the-arm as it further increases the proportion of cash transactions that can be undertaken, while enhancing many business cases for contactless rollout.

The key on both sides of the transaction is education. Retailers need to be further educated about the benefits, and what contactless technology can do for their business.  With research by US firm CVS showing that a contactless payment can be completed in only 12.5 seconds, compared to cash and chip-and-pin transactions taking an average of 34 and 27 seconds respectively, the opportunity for queue-busting is huge. In parallel to this, as long as both retailers and card issuers collaborate to help customers understand the benefits and how to use their cards, contactless transactions will spike.

The recent announcement that contactless technology will be increasingly used at festivals and similar events, will increase consumer exposure to the technology and the convenience it brings – after all, who wants to carry pockets of change around at Glastonbury?

Of course, contactless payments are not only limited to cards. NFC elements in mobile phones have been used to pay for goods. Once contactless cards are fully integrated and ingrained in society, using mobile phones for payment will only follow suit.

*Source: MasterCard International 2007 – results of PayPass trials conducted in the US in 2005-2006