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

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

Acquiring market insight and strategy review

"Savantor brought an independent perspective and valuable insight that enabled Rabobank to ratify options for delivery and future growth and make informed business decisions in support of our target business model. Having used Savantor on a number of strategic projects, we have no hesitation in recommending their services to others."

Evert R Fekkes, SVP Payment & Savings Services - Rabobank - Nederland

Acquirer Transformation

"We needed a programme manager for a complex transformation who also brought a broad understanding to help stakeholders through the change. We have been delighted with the delivery and outcomes from this engagement with Savantor."

Michael Liquornik, Executive Vice President - Neovia Financial - UK

Card Migration

"I was impressed by the speed with which the Savantor team were able to start delivering and as a team they have made a significant contribution to the success of the Programme."

Bjorn Niels, Programme Director - ABN AMRO Bank - The Netherland

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

Commercial Card Migration

"Execution at its best. We're delighted that this project has been truly outstanding and received an award from 'The Banker'. Savantor provided crucial expertise that helped us keep all our promises in terms of delivery. The scheduling, planning and control regime throughout was excellent."

Chris Mason, Director - Commercial Cards EMEA - Citi - UK

Issuer and Acquirer Transformation - Assessment and Mobilisation

"We were in urgent need of external independent expertise to supplement our internal resources. Senior consultants had to quickly integrate with a diverse team from across the bank and actively contribute. I am pleased to say that Savantor was able to deliver on our needs as well as being good people to do business with."

Lars Bostrom, Head of Cards - Nordea - Scandinavia

Interchange Review

"Savantor did a superb job in confirming what we believed was an area of weakness. The detail we now have will enable us to agree internally what we need to do to improve structure, control and income. Nationwide management were very impressed with the quality of the Savantor team."

Adam Slater, Senior Manager - Banking - Nationwide Building Society - UK

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.