National brands such as fast-food chain McDonald’s and chemists Boots are driving the growth of contactless payments in the UK, according to Visa’s UK and Ireland MD, Marc O’Brien, helping to lower the barrier to adoption among consumers and smaller retailers (reports StrategyEye). Speaking at a Westminster Media Forum in London, O’Brien says that while shops and restaurants are increasingly offering contactless payment terminals that let customers tap NFC-enabled credit cards to make a payment, acceptance of contactless payments in sectors outside of retail, such as transport, is also increasing. He argues that the combination of consumers becoming more accustomed to making contactless payments and the growing infrastructure of point-of-sale terminals is paving the way for the acceptance of contactless payments on mobile phones and driving the UK market toward a tipping point, when the technology will enter the mainstream.
“Our contactless card roll-out started with coffee shops but we found they are not the environments to drive huge scale – it’s the Boots and McDonalds,” says O’Brien. “It’s the national brands that will drive scale volume. They will be critical to the volume growth of cards acceptance and they will create a readiness to accept mobile phones with NFC capabilities.”
Visa is experimenting with a number of different contactless payments solutions, including credit cards with embedded NFC chips that users tap to a payment terminal to pay for their goods. O’Brien says there are now 30m of Visa’s contactless cards in circulation in the UK, accounting for one in three of its customers. Visa has also partnered with more than 80 handset manufacturers, including Samsung, to embed NFC chips in mobile handsets, so that users can use their devices for wave-and-pay transactions in store. The firm has also launched NFC stickers that users can affix to devices such as iPhones to use the technology.
Transport will play a key role in driving the adoption of contactless payments and building up the infrastructure in the UK, according to O Brian. Contactless payments use NFC technology, which transfers data across short distances, and powers the London Oyster card system. According to O’Brien, 5,000 cabs and 6,000 buses in London are now kitted out with Visa contactless payment terminals in partnership with Transport for London (TfL) , with the tube to follow later this year. He claims that there were more than 1m contactless payments made on buses in the month after the service launched in November, highlighting strong demand among consumers.
“What TfL does here resonates throughout the rest of the world and this is a jewel in the crown of the UK to drive electronic payments,” says O’Brien. “Transit is critical for scale volume and it is a use case where consumers get used to seeing that this is a way to pay.”
Nonetheless, actual adoption of contactless payments remains very low. While 80% of people polled by ICM say they know what the technology is and a quarter of those surveyed say they own a credit or debit card that can make such purchases, only 8% are actually using them. ICM claims that part of the problem is that retailers are not promoting the fact that they accept contactless payments, highlighting the role they will play in leading consumer adoption. While many cite the potential of contactless mobile payments, many believe consumers need to trust and understand the technology first before they will start paying for goods on their phones. Getting them started on credit cards should help the shift to mobile payments.
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