News & Views - Savantor

Continuing growth of contactless payments

Wednesday, 16 November 2016

New figures released by the UK Cards Association show that one in five card payments are now made via contactless. Usage jumped from being 7.9% of card purchases in August 2015 up to 21% of card purchases in August 2016. During that period, the number of contactless transactions almost tripled, increasing from 89 million in August 2015 to 260.7 million, while the number of contactless debit cards in circulation increased from 74.5 million to 97 million during the same period.

The £2 billion milestone for contactless spending was reached in July this year, when a total of £2.1 billion was spent on contactless cards, more than three times higher than the same period last year.

This growth in usage is also evident across Europe, according to research undertaken by RBR. By the end of 2015, the number of contactless card payments had increased three-fold during the year to 3.7 billion - equivalent to 5% of all card payments.

RBR forecasts that by 2021, half of all European cards will be contactless, with a resulting increase in contactless payments of more than six-fold over the next five years to almost 25 billion, equating to 22% of all payments on European cards.

Not surprisingly, the POS market is forecast to show a similar trend. According to market research company Berg Insight, more than 77% of the world's POS terminals will be NFC-ready in 2020, up from 46% in 2016. Although previously the installed base of NFC-ready POS terminals has grown quickly, in many cases the contactless technology was not been activated. However, this is now changing and the research company estimates that approximately 15.0 million POS terminals were able to accept contactless payments by mid 2016.

It is interesting to note that whilst 'millenials' (18-35 year olds) in the UK are fully embracing contactless payments, preferring it to Chip and PIN, according to research undertaken by VodaLink recently into payment usage habits across Europe, this payment method has been slower to take off in other European markets, such as Germany and Italy.

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