Contactless payments now account for one in 10 card transactions, and with contactless spend nearing £1bn a month, Barclaycard research indicates contactless is a huge potential growth area for UK retailers.
- Spending in pubs and bars made by ‘touch and go’ payments has almost doubled (up by 92 per cent) since the contactless limit rose from £20 to £30 in September, according to Barclaycard data*
- Contactless spending in fast food outlets and in restaurants has also jumped by 62 per cent and 51 per cent respectively over the same period
- More than 8 in 10 consumers use less cash than they did a year ago with 19 per cent annoyed if they can’t pay using contactless cards or devices
- With contactless now the preferred payment method for almost half of shoppers, a significant opportunity exists for the two thirds of merchants who do not currently accept contactless
Where’s Britain spending on contactless?
Service stations, pubs and bars, and fast food outlets have proved to be the key beneficiaries of the contactless limit increase, which rose from £20 to £30 on September 1st this year. Contactless spending in service stations, pubs and bars has almost doubled since August (up by 98 per cent and 92 per cent respectively), with spending in fast food outlets and supermarkets also climbing, both categories up by 62 per cent.
Across all spending categories, supermarkets have led the charge in the adoption of new payment technology this year. Three in 10 (30 per cent) of all contactless transactions are now made in supermarkets, and the £30 upper limit also means the average cost of a basket of goods – £25 – can now be covered in a single contactless transaction.
| Category |
Spending growth following £30 limit increase |
| Service Stations |
98% |
| Pubs and Bars |
92% |
| Supermarkets |
62% |
| Fast food outlets |
62% |
| Convenience Stores |
59% |
| Commuter transport |
55% |
| Restaurants |
51% |
| Pharmacies |
49% |
| Newsagents |
40% |
| Caterers |
7% |
58 per cent of merchant respondents to the Barclaycard survey said that customers are using mobiles and wearable devices more often to pay for goods and services. This suggests that newer payment methods such as Barclaycard’s bPay wearable devices – which include a wristband, fob and a sticker and can be used to make contactless payments at more than 300,000 terminals across the UK – are set to become a firm fixture in the payments ecosystem.
The Barclaycard research shows that just one in three merchants (34 per cent) currently accepts contactless, but with 83 per cent of shoppers also carrying less cash than they did a year ago – and 19 per cent admitting to being 'annoyed’ if they can’t pay contactlessly – it’s now more important than ever for businesses to introduce ‘touch and go’ as a way to pay.
What’s in store for 2016?
Over the next 12 months, as consumers start to search for ways to make larger payments more quickly, high value contactless payments – where shoppers can make contactless payments over £30 using a mobile device with Chip and Pin authorisation – are also likely to become increasingly popular.
Early next year Barclaycard will become the first financial services brand to launch high value payments on Android devices, expanding the functionality of its mobile app to include contactless mobile payments. Barclaycard customers using this new feature will be able to make contactless payments for transactions up to £30, and for the first time, will also be able to make high-value contactless payments of up to £100 by entering their PIN on their mobile device.
In another UK market-first, Barclaycard is introducing an ‘instant card replacement’ feature to Android users. This will enable customers to have a lost or stolen card replaced immediately on their mobile phone. Customers simply report their card as lost, stolen or damaged by calling the contact centre for free from the Barclaycard app and the virtual replacement card will be instantly downloaded for immediate use. A plastic card replacement will then follow in the post.
Paul Lockstone, Managing Director at Barclaycard said:
“In 2015 we’ve seen contactless become an even more popular way to pay for small transactions, so much so that we can even get frustrated if a retailer doesn’t offer ‘touch and go’ as an option. As the consumer appetite for new ways to pay continues to grow, particularly with the upcoming launch of high value payments and the continuing growth in wearable payment devices, we’re expecting 2016 to be another recording breaking year for contactless.
“In the fifty years that we’ve been in business, we’ve played a key role in supporting the development of many new payment innovations – from introducing the first credit card to the UK, to launching Chip & PIN, Contactless and wearables. The consumer trend towards contactless is only set to increase, with our data showing that time pressed shoppers don’t like to hang around – there’s a real opportunity for UK retailers to step-in and meet this growing consumer demand.”