Contactless payments hits the spot for UK consumers

Contactless payment is on the up.
Contactless payment is on the up.
  • Contactless payments up 92 per cent in bars and pubs as limits rise.
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Spending in pubs and service stations using contactless payments has almost doubled since the limit rose three months ago, according to new research.

‘Touch and go’ payments in service stations are up 98 per cent and 92 per cent in pubs and bars since the limit rose from £20 to £30 in September, Barclaycard said.

The new payment technology now accounts for one in 10 card transactions with spend nearing £1bn a month.

Contactless spending in fast food outlets and in restaurants also jumped 62 per cent and 51 per cent respectively between August and November last year.

A survey by Barclaycard found that more than eight in 10 consumers said they use less cash than they did a year ago with 19 per cent annoyed if they can’t pay using contactless cards or devices.

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.”

Across all spending categories, supermarkets have led the charge in the adoption of new payment technology this year.

Thirty 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.

Contactless spending in supermarkets climbed 62 per cent between August and November.

The Barclaycard research found that one in three merchants currently accepts contactless.

However, more than half of merchant respondents to the survey said that customers are using mobiles and wearable devices, such as wristbands, fobs and stickers, more often to pay for goods and services.

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.

Mr Lockstone said: “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.”

He added: “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.”

Contactless payments hit the big time in 2014. By the end of the year there were 52.8m cards in circulation in the UK, clocking up 32m transactions (worth £253m) every month.

In October 2015, there were 76m contactless cards in issue in the UK.

During the month, £929.8m was spent over 120.5m contactless transactions, an increase of 213 per cent over the year according to the UK Cards Association.

On average, each contactless transaction is for £7.72 on credit and debit cards.

Contactless beginnings

Contactless technology began in 1898 when Nikola Tesla invented remote control technology, demonstrating a teleautomation system that used radio signals to control a miniature boat in Madison Square Garden in New York.

Today’s contactless technology is largely based on electrical engineer Charles Walton’s development of the radio frequency identification device in 1983.

In 1995 the world’s first contactless payment card was launched by Seoul Bus Transport Association for bus and rail commuters in the South Korean capital.

London followed in 2003 with the launch of the Oyster Card.

Contactless credit and debit card payments were introduced in the UK in 2007.