News & Views - Savantor

Contactless options

Monday, 16 April 2007

Ok so come September in London you can either 'wave and pay' or 'tap and go' but is it the final nail in the coffin of cash?  Probably not.  Cash transactions have been declining for the last 20 years and cards are taking over as the prime payment vehicle – particularly debit – but cash remains the most popular way of making small payments, with 96 per cent of all spending under £5 done with notes and coins.  Cash accounts for nearly two-thirds (63 per cent) of all day-to-day payments, with the £20 note being the most popular denomination of them all – accounting for 66 per cent of all notes dispensed by UK cash machines in the last quarter of 2006.  The key to attacking this cash mountain and to success of the launch of contactless will be the same as it was when chip and pin launched – retailer take up.  Transaction costs are still to be agreed for contactless payments and there is some resistance from retailers who believe accepting transactions on cards will increase their costs.

For the larger retailers like the supermarkets the key is whether the cost of accepting transactions via contactless cards will be the same as the cost of handling cash.  For these organisations the cost of accepting £100 worth of cash transactions works out at around 5p whereas it could be significantly more for contactless payments if the pricing structure were similar to that of a MasterCard or Visa debit card transaction.  The card schemes recognise that if contactless cards are to compete with cash then the transaction charges for large merchants have to be the same or lower than the cost of accepting cash.

Visa EU has a target of 200,000 Visa contactless cards in use and between 2,000 and 2,500 acceptance devices in the retail marketplace by the time of the launch in September.  If it is to hit this target then it must convince the retailers that the business case stacks up.  This must include items other than transaction costs such as reduced cash float in tills and increased speed of transactions.

Unlike chip and PIN, there may well be a better business case for smaller retailers like newsagents and coffee shops to install contactless technology because they do not benefit from the same deals on cash handling that the big retailers enjoy. But until the major supermarkets accept contactless payments the UK attack on cash payments will be a bit of a blunt instrument.  So cash will be around for a good few years yet if indeed it ever goes away.  The real thrust on reducing cash is more likely to come when contactless goes mobile with NFC and that may be sooner rather than later. 

Savantor Services

Savantor Services

Savantor services are tailored to Client needs based on our core service areas

Specialist Resourcing Payments Strategy Platform Transition Operational Efficiency
Savantor Services

Job Opportunities

Consulting and contracting roles in the payments, mobile and banking arena within the UK and across Europe

View more
Savantor Services

Savantor Views

Find out more from our Savantor brochures, MarketEye back copies and Industry opinion

Collateral Market Eye News & Views Sign Up to receive MarketEye

Client Quotes

Moneris Solutions

"Savantor did an outstanding job of the review and I received nothing but positive feedback on the interaction with our management team."

Jeff Guthri, COO - Moneris Solutions - Canada

Acquirer Specialist Support

"OP-Pohjola Group has used Savantors help in numerous different specialist projects differing from risk assessment to management tool creation to transaction analysis. We have been very satisfied by the quality of the service provided by Savantor's experts."

Kai Lindstrom, Head of Acquiring - OP-Services Ltd - Finland

EMV Migration Planning

"It was a strategic imperative for the bank to be EMV compliant for our payment cards and the experience that Savantor brought to the company has proved to be invaluable."

Eddie Sweeney, Chief Technology Officer - AIB Bank - Ireland

New Payments Initiative

"In moving our new initiative into reality, we required specialist payments knowledge and forward thinking in the retail sector. Savantor supplied this and provided very effective guidance throughout. We enjoyed working with them."

Sophie High, Head of Innovation Delivery - Cancer Research UK

Acquirer Risk Assessment

"The expertise provided by Savantor has greatly helped us evaluate our risk position and to take the right steps in managing our future risks. Strong, disciplined planning and an ongoing willingness to work closely with our staff played an enormous part in making this a very successful well-delivered project which will greatly help us in achieving our business goals."

Mark Healy, Chief Risk Officer - NEOVIA Financial - UK

Credit Risk Review for New Product Launch

"We needed expert help at short notice and Savantor were very impressive in their response and knowledge. The results were very clear and useful, enabling us to quickly make good progress on the next steps."

Sami Karhunen, Head of Business Intelligence and SME Sales - Point Transaction Systems Oy - Finland

Platform Selection & RFP Management

"OP-Pohjola Group has used Savantor in both acquiring and issuing for platform/service provider research, RFI/RFP processes and subsequent contract negotiations. Savantor's approach and commitment have always been very professional and transparent. They have been of great help for the company in providing us important insights and background information beyond vendors sales speeches."

Kai Lindstrom, Head of Acquiring - OP-Services Ltd - Finland

Expert Witness

"After searching extensively for the required industry expert in a complex litigation, Savantor was identified to have the necessary industry knowledge and expertise on a range of complex issues. Savantor provided clear advice and was able to quickly hone in on the key issues, but most importantly, generating pragmatic winnable answers."

Gavin Ingram, General Counsel & VP Strategic Planning - Global Blue - Asia Pacific

Clients - Request Support

Send us a support request and one of our specialists will be in contact to assist you.

Consultants – Upload your CV

Register your CV with us and gain access to a range of job opportunities through our online job search portal.