UK embraces contactless payments

Total UK contactless spending rose by nearly a third last year to £69 billion, with tap and pay now accounting for more than 40% of all card transactions, according to industry figures.

  20 4 comments

UK embraces contactless payments

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

The UK is now a contactless country, with 123 million of the country's 159 million debit and credit cards incorporating the technology, according to UK Finance.

And, thanks in large part to adoption on public transport, these cards are being heavily used, with 7.4 billion contactless transactions in 2018, 31% up on 2017.

While debit still dominates, the number of contactless credit card payments is growing at a faster rate, up 44% on the previous year.

In December, of 1.6 billion debit and credit card transactions, 691 million were contactless - about 43%.

Total spending on debit cards in 2018 was £584 billion, up 3.7% on the year before, while credit card spending was £192 billion, up 7.8%.

Eric Leenders, MD, personal finance, UK Finance, says: "Many of us are now reaching for our cards or mobiles rather than cash to make low-value purchases, as customers opt for the convenience and security of paying with contactless.

"There has also been an increase in credit card use although growth in outstanding balances has slowed, suggesting many consumers are using their cards for day-to-day spending rather than as a means of borrowing."

Despite the seemingly unstoppable march of plastic, a recent report warned of the dangers of leaving cash behind.

The Access to Cash review prepared on behalf of the Link ATM network, concludes that digital payments don’t yet work for everyone and around eight million adults (17% of the population) would struggle to cope in a cashless society.

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Comments: (4)

A Finextra member 

Is it a desirable development that more than 40% of the card payments happen without the card holder verifying the transaction with PIN or biometrics? The contactrless low value payment is an exception from the legal requirement on strong two factor authentication and it seems that it is becoming the rule instead. Is this the intention of the regulator?

Craig Lawrance

Craig Lawrance Sales Exec at Starkspur Ltd

Is this physical cards at the PoS? Or does this include payments made from mobile wallets?

Ketharaman Swaminathan

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

When credit cards were invented, they were meant to replace cash by being as easy to use as cash. If, in the process of fulfilling that goal, a credit card is misused, then the issuer bank is required to reverse the charge, no questions asked (and recover it from the merchant, subject to certain conditions).

Over time, the basic purpose of credit cards has been subverted by banks who have flipped the issue to security by layering up more and more security measures, which make credit cards inconvenient to use and / or introduce risk of failed payments. By making cardholders value security, and by increasing security, banks have coolly transferred their fraud protection liability to cardholders.

It might sound counterintuitive but the more secure a credit card is, the more liable the cardholder is for fraud and the more scotfree the bank goes in case a fraud happens.

Ergo, if my understanding of the raison d'être of credit cards is correct, *ALL* credit card payments should happen without PIN or any other form of authentication. Kudos to contactless cards for fulfilling at least 40% of that goal.

A Finextra member 

In Australia, contactless credit cards need a PIN Number when the transaction is over $100.00 in value. I believe this threshold is 20.00 Euros in the UK. It does look like the slow but certain progression towards a cashless society in the UK is making annual progress. Nobody should be in the business of foretelling when a cashless society happens in any nation-state. Leave magic to the mystery and delicate sophistry of magicians and palm readers. While Samsung Pay & Google Pay have been available in Australia for several years through a variety of financial institutions, Apple Pay has taken much longer time to become available. As an iPhone user of many years, it has been a very painful and frustrating wait for agreements between Australia’s major and minor banks on the one hand, and Apple to finally agree on contractual terms. Minor banks such as ING were the first cab off the rank followed by the four major banks who took a very long period to settle compared to the minors. The ANZ bank was the first major bank to sign with Apple Pay, followed by the CBA after a considerable period. After another long stretch, Ubank and the NAB had contracts with Apple which renewed my waning interest as I bank with them. Customers of Westpac are the last group of people still waiting for Apple Pay and their bank to sign an agreement. Out of curiosity I rang Westpac who told me that they expect to have Apple Pay available to all of their customers in the coming months. I love using Apple Pay. Despite the beauty & promise of technological development I do not think that cash will go quickly. There always are holdouts who refuse to roll over. Eventually their volume will diminish to a small rump and the writing on the wall will loom ever ominously in people’s minds that a progression to a cashless society will be seen as unstoppable and unanimous.

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