New research published at the end of January goes a long way to show just how important contactless technology has become not only as a convenient method of payment but also as a driver of companies profits.
Contactless ‘off the charts’
Contactless payments reached 1.7 billion transactions in the year to September 2015. In the UK, contactless transactions now make up 1 in 7 face-to-face Visa transactions (Oct 2015), compared to 1 in 25 just one year ago.
“Contactless transaction growth is off the chart – in 2015 we went through the billion contactless transaction-a-year barrier – and in a leading market like the UK it’s fast making cash seem peculiar,” said Visa Europe CEO Nicolas Huss.
Last week, Visa Europe revealed record revenues, up by 25 per cent year-on-year, and it’s hard not to argue that the company’s contactless technology structure wasn’t a major part of this success.
It would be hyperbolic to describe Visa’s contactless presence in Europe as monopolistic, but ‘dominant’ wouldn’t be a stretch. Visa’s payWave accounted for 61 per cent of the 1.4 billion contactless payments in Europe in 2014, according to the research firm RBR. MasterCard’s PayPass accounted for the bulk of the remaining 39 per cent.
However, in the 12 months to June 2015, Visa Europe says that it alone accounted for 1.4 billion transactions! I wonder if the figures for 2016 will show that Visa Europe accounted for 1.7 billion transactions – as if it is vying to single-handedly surpass the previous year’s total.
MasterCard shouldn’t be underestimated
However, it should be noted that the circumstances could change and Visa could find itself on the backfoot. RBR points out that whilst Visa’s payWave dominates the more developed countries such as the UK and Poland, MasterCard’s MasterPass is favoured much more by countries such as the Netherlands and Russia, which RBR describes as ‘growing, but yet under-developed. In fact, in the Netherlands all contactless cards are issued by MasterCard and in Russia, the number of contactless payments is forecast to rise 65-fold between 2014 and 2020!
It is essentially a duopoly in Europe between Visa and MasterCard, which is not surprising in the slightest. Other schemes make up less than two per cent of contactless payments. These include Germany’s Girogo, which in the domestic market accounts for 62 per cent of contactless card payments and Amex ExpressPay which is used in Greece and Turkey.
Contactless market will change as tech grows
“Contactless has spread rapidly in Europe, and RBR forecasts the payment volume to increase nine-fold between 2014 and 2020 as the technology gains traction in more countries in the region. As a result of greater contactless usage in a number of under-developed markets where MasterCard is the main scheme, for example Russia, the gap between Visa and MasterCard is likely to narrow to reflect the overall scheme shares for all card payments in the region,” the report concluded.
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Contactless cards made up 22% of all card transactions in the UK in September, according to the latest figures from the UK Card Association. Payment card spending grew by 0.6 per cent in September to reach £54.7 billion.
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