We live in a fast-paced world where time is of the essence and in the UK we’re a nation of contactless converts. And, we’re not alone in our admiration for ‘touch-and-go’ technology. From Paddington to Peru, consumers in over 100 countries wield contactless cards and devices to help them reach their desired location quicker than you can say ‘marmalade’.
It’s clear that the trend towards cashless payments is gaining momentum. Wearable payment tech is a booming market with global device purchases set to hit more than 500 million within the next three years, with an estimated 20% of these expected to be connected with a payment, money management or transport application.
Research by the European Central Bank found that 66% of all western European transactions were cashless in 2015. According to Sweden’s central bank, Riksbank, cash transactions accounted for barely 1% of all payments made in the country in 2016.
Fast-forward to today, and Swedish commuters are taking ‘cashless’ to the next level. In an initiative launched by Swedish rail company SJ in the summer of 2017, a small set of travellers embarked on a trial using biometric chips implanted into their hands in lieu of paper tickets. You’d be forgiven for thinking it sounds like something straight out of a sci-fi film – there’s certainly a ring of Minority Report about it – but there’s also a feeling that maybe now, in 2018, the ‘future’ has arrived. Since launching the trial in June with 100 of SJ’s loyalty programme members, there are now believed to be over 3,000 travellers using the technology.
Big Apple chomping
In October 2017, The New York Times ran the story: ‘New York to Replace MetroCard With Modern Way to Pay Transit Fares’. The Big Apple is going contactless in a big way.
Transport payments firm Cubic, has struck a deal with Transport for London (TfL), worth up to £15m, securing a license for use of London’s contactless ticketing system worldwide. Having introduced the Oyster card system back in 2003, and worked with Barclaycard to make theirs the first public transport provider to accept contactless payment cards, TfL has a wealth of experience and will surely be one resource the Big Apple would not want to be without.
Having approved a $573 million contract for a new fare payment system, the MTA will install new electronic readers in 500 subway turnstiles and on 600 buses by the end of this year, with the rest of New York earmarked for modernisation by late 2020.
Flying the flag for contactless
London commuters and tourists alike have been using contactless technology since autumn 2014. From July last year, Transport for London (TfL) figures showed the proportion of contactless payments for journeys rose from 25% to 40%. Of the one billion trips made using contactless, one in 10 taps were with mobile devices – equating to more than 31 million journeys made specifically with mobile phones in London in a 12-month period.
With contactless solutions growing in prominence - it’s no surprise that card and contactless payment providers are in ever-increasing demand. Just last year, Barclaycard secured a new 10-year contract to provide contactless payment solutions to TfL, including the roll-out of contactless for the new Elizabeth Line – a £14.8 billion track which opens in late 2018. At the time the contract was awarded, Barclaycard was responsible for nearly four in ten pay-as-you-go journeys on the capital’s Tube, rail and bus services, and had processed over 278m contactless transactions.
And it doesn’t stop in the Big Smoke, mobile payments increased by a staggering 365% in the past year alone and spending via Barclaycard’s bPay leapt by 129% – with Belfast, York and Newcastle-upon-Tyne filling the top spots for yearly growth. But where have these contactless consumers been spending exactly? At an annual increase of 235%, it’s full steam ahead for trains as rail users go contactless to tap in and out at the ticket gate.
Firms such as National Express West Midlands are also getting in on the act with plans to install the technology on 1,600 buses throughout its network later this year, in an effort to speed things up for commuters and leisure travellers alike.
Cash going Down Under
It’s not only the UK and US where consumers are looking for faster and easier payments solutions. In July 2017, card payments overtook cash for the first time in Australia, according to the RBA’s Consumer Payments Survey.
The subsequent report indicated convenience as the deciding factor. The trend towards making smaller value payments on card reflects the growing use of contactless payment methods in Australia, through ‘touch-and-go’ technology like payWave and PayPass. In 2007, Aussies used cards to make just 10% of purchases under $20. In 2016, that number had grown to 40%.
But it’s not all plain sailing. A 2017 GlobalData survey found less than 27% of consumers in Australia are ready to adopt mobile solutions, compared to around 46% of consumers in the US. The US is excelling in this area, despite the later uptake of contactless card payments. By 2020, the number of people using mobiles to pay for goods at a physical point-of-sale is estimated to surpass $314 billion.
ApplePay, Paypal and Mastercard PayPass are already in use across much of North America, as the total number of mobile payment users worldwide is expected to rise from 166 million in 2018, from just 5 million in 2012.
The long and winding road
The adoption of contactless technology presents different challenges in different parts of the world, but the data shows us that where the technology is available uptake is on an upward spiral.
At the moment, the automotive industry is one area where we are seeing momentum. For example, Jaguar partnered with Shell last year to give drivers of its F-Pace, XE and XF models access to an in-car payment system, for the ultimate ‘drive thru’ experience.
Buckle up! We’re in for a fascinating ride.