We speak to Tami Hargreaves, director of Digital Consumer Payments at Barclaycard, about everything from the new bPay product that turns watches and fitness bands into wearable payment devices to the significance of TfL adopting contactless payments and a future beyond the card rail system.
How did the idea for bPay Loop came about?
I really, really love the evolution of this product. Ever since we experimented with bPay, we’ve always had a really strong commitment to have a very open channel with our consumers, always seeking feedback, research groups, particularly in a new category such as wearables and payments.
When I focus on Loop and the background of these products, it really makes me smile when I think it absolutely was as a result of that continuous customer feedback. Our customers constantly send photographs on Instagram and on other social media and share their thoughts about their products, which we love. A number of customers started to engage in a dialogue with us about ‘what we’d really really like is something that integrates into something I already wear or use.’
With the big focus on fitness today, we thought it would be a lovely alignment with that, and watches remain a staple for most people. That’s where the idea of Loop really emerged. Based out of a customer need.
We’re really excited, it’s quite a change from what we’ve done before in terms of having standalone products in our own proprietary range, and we really think there will be a huge appetite.
Do you think this is the first step towards working with external partners like you did on the Lyle & Scott contactless jacket?
Absolutely. We’ve always had two very clear pillars of strategy for bPay. One has been a continued development and enhancement of our existing product range like the wristband, the fob, the sticker of last year and now the loop.
But we’ve always been very keen to also partner with a number of players in the market whether they be test developers, product manufacturers, fashion designers.
The Lyle and Scott jacket and the two Topshop ranges that have gone to market are really good examples of that.
If you think about products that are being produced today, most have a chip of some kind. Our belief is that you can start to enable many things in that chip. For a car key fob for example. That’s certainly going to be a trend that’s going to grow, think automotive connected cars, fashion – there’s been a lot of advancements in integrating technology. Fashion and jewellery we’re really excited about.
Whta do you make of the shift to ‘home as a commerce hub’?
There’s already some really interesting products that enable technology within the home like Amazon’s Alexa. Start to think about what that product is starting to do for managing convenience and seamlessness within the home. You start to insert payment capabilities and think about how you could enable a fridge, voice responsive digital personal assistants.
We’re excited by this space because the opportunities are really broad – think payment within home payment, on the go, payment in car, payment anywhere! Think beacon technology and biometrics and your authentication as you enter a store. There are more and more opportunities to think creatively and design beautiful seamless experiences for the consumer. We’re really interested in investing in that space.
Barclays contactless app is taking on Android Pay. What is it about it that can make it go all the way?
If you think about the contactless mobile payment that we’ve developed within our existing apps today, we’ve had in development for some time. So we were always on a steady path, before there was much hype on mobile to be honest in the last year or so. We were always very confident that we were going to take this product to market for a number of reasons.
In 2011, we were the first in the UK to launch a mobile payments solution, that was our Quick Tap solution in partnership with a number of players, but it was restricted to two handsets at that point in time. It was pretty complex but we learnt an awful lot around what great experiences needed to look like in the mobile space. We’ve also been wed to the idea that mobile was going to be very very big in the payments space and we’re really starting to see that now.
As with all innovation, it takes time and many iterations, and I think we’re finally there in terms of some really great solutions and designs.
What distinguishes you from Android Pay?
We’ve got so much experience in contactless over the years and our customers continue to tell us that they want to remain in control. They want control that enables them to switch off features so they don’t feel too exposed. So we built in two device features into the mobile app to play to that point. One was in an instant you can deactivate your card – it takes less than a second. If you’re not sure where your card is or if you left your wallet at home, you can simply switch it off within the phone.
If your card is lost or stolen you can also digitally, instantly reissue a new card onto your phone the moment you block the old lost/ stolen card. In addition to that, we’ve also added the extra feature for contactless for those who are new to mobile payments can switch on an additional layer of security that they can switch on an additional PIN if they want to in the early days whilst they get comfortable with the technology.
Is this the first step to moving away from the physical card? How long do you think before we move away from card rails completely?
We’re already seeing an interest in, and certainly a trend of, plastic-less or cardless accounts. We get a lot of feedback from our consumers, who say, Actually, I can serve all of my needs now with the products that you’ve given me and I find that I’m leaving my card now more at home.
I think there are a couple of things that will happen in the market that will make it a more significant shift. First of all, when all of the terminals in the UK are contactless and can manage high-value payments, that’s when there will be a real ubiquity reached in terms of mass adoption. That may be the limitation for some people today.
All terminals will be contactless by 2020 and that is going to be fantastic for consumers. Today, sometimes you’re not sure whether merchants to accept contactless, but that’s becoming less and less. Once you know with confidence that everywhere you go accepts contactless, you see a significant shift.
The second part is we need to respect still customer choice. On the one hand there are people who really want to adopt new ways of paying mobile wearables. They are going to have this fantastic infrastructure that just continues to grow and get stronger year on year. But I do think there will still customers who want to continue paying in the traditional way.
Much the way we still say that cash is in decline, the evidence very clearly points to that, some customers still choose to use cash and we will continue to serve those customers. In the same way, we will see a decline in plastic, but some customers will continue to prefer traditional ways to pay. And our commitment is providing that range of options.
What are your thoughts on contactless growth?
The growth of contactless adoption continues to astound me. Year on year, month on month, we continue to see growth and the switch occurring. In May this year, we have seen our highest ever spend on contactless: £1.9 billion in the UK market. If you then look at January to May this, we have spent the equivalent of the whole 2015 already. That just gives the indication of the shift and the rate of switching. Part of that is down to the limit increase in September from £20 to £30.
We’ve now reached a minimum threshold for mass adoption in the UK. I talk to customers all the time, both business and consumer. I was actually with a group of small business customers and I always ask, “When you can’t pay contactless, how do you feel?” And the reaction I get absolutely consistently now is a real sense of frustration. Customers say they want to pay with contactless because it’s easy and convenient.
Some customers have told me they have started to opt out of retailers who don’t offer contactless. I think that’s phenomenal. The message to businesses is really listen to customers, we need to offer the services customers want and do it quickly because that convenience factor plays a big part for consumers who choose to pay in that way.
I think it’s more of a steady growth and transition and I think we continue to see that adoption rate rise between now and 2020 and grow at a very fast rate. We see, year on year, for the last three years, a doubling of usage and spend and I think that will just grow even faster.
What have been the main contributors to contactless adoption?
I think one of the big game-changers in that has been TfL. Think about 2014, TfL rolling out their fully integrated contactless solution. It really brought it to the consciousness for many spenders in the UK. I think that was a pivotal moment really, because the spike that we then saw, in terms of everyday spend, that from dawn to dusk spend, beyond the transit moment has been phenomenal. Then with the supermarkets that came on board, we continue to see that spike emerge and grow. It’s just about convenience.
If we take the TfL approach and apply it nationally, will that completely change everything in terms of adoption?
I think the data and trends that wee see from TfL for me make that an absolute certainty. The more we could see transit enabled in a contactless way, I think it just naturally follows the adoption in other ways to pay or other merchants or retailers follow because I do the journey up and down the country and I get frustrated when I can’t continue to pay contactless and then have to revert to a face-face solution. Which just adds time and irritation to my journey.
I do think there are a lot of cities that are interested in replicating something similar to TfL, but you have to remember, that project was a long time in the working, but I would be a strong supporter and advocate of seeing transit rolled out for contactless in key cities around the UK. It would be a massively switching catalyst for cities to grow even further.
Just to remember, from the city data, we’ve really challenged the old thinking of contactless only being a London hot-spot trend. Now you look toward the other cities that are growing, the growth rate, the adoption and penetration of spend is huge.
What are your thoughts about stereotypes about older people being technophobes?
We definitely challenge that perception! I think that when we started, it was natural for younger demographics to want to try something new, be at the forefront of embracing technology. We see that in many new evolutions, and we certainly saw that in the early days of bPay.
Actually, what’s lovely to see now is that all of our products really do span generations. We highlighted what we now call our ‘Silver Spenders’. The rate of adoption, we’ve seen a doubling in their engagement and spend. That’s really interesting because it really dispels these myths. I’m really really pleased with that trend.
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