What is the future of contactless cards?

Contactless cards are in line to experience stratospheric growth in the next few years as Europe is expected to witness a nine-fold rise in contactless payment volume by 2020 compared to 2014, according to research from RBR.

future of contactless

Source: Global Payment Cards Data and Forecasts to 2020 (RBR)


Over the slow start

The NFC cards have truly overcome a slow start in Europe last year when at the end of 2014 there were 223 million contactless cards in issue in Europe, up 65 per cent compared to 2013, and representing 15 per cent of all payment cards.

And with increasing acceptance comes accelerated growth of usage as , there were 1.4 billion contactless payments worth €15 billion in Europe in 2014, rises of 155 per cent and 190 per cent respectively compared to 2013, RBR has revealed in its study, Global Payment Cards Data and Forecasts to 2020.


Still work to be done

However, despite describing these figures as “staggering”, the research firm said we should not be carried away by them just yet as “contactless transactions still represent just 2 per cent of the overall volume of card payments in the region and 0.5 per cent of their value.”.

Despite the technology being fantastically deployed in countries such as the UK and the Czech Republic, like with any new payment method, it is just as much about need as it is about convenience.

Even as recently as the end of 2014, there were no contactless cards at all issued in Denmark, Estonia, Lithuania, Norway or Sweden, whilst more than 60 per cent of all cards in the Czech Republic, Poland and Slovakia were contactless.

In countries like the UK we traditionally used cards for higher value purchases and cash for lower-value, so there was a need factor, a convenience factor and therefore a business case to make a new type of card that would make low value payments easier.

But this is not the case in all European countries. According to RBR, Sweden started to issue contactless cards only in 2015, because traditional cards already well established and consumers were frequently using them for low-value payments. Therefore, the business case for contactless payments was lessened compared to other markets where cards were typically only used for transactions above a certain value.

As well as a need factor, there is also the cost factor that comes into play. In Russia, for example, owing to the high cost of converting cards to contactless, banks focused initially on issuing only premium and high-tier contactless cards.



Despite these obstacles, RBR’s data suggests there is only one way the technology’s popularity can go: up.

The volume of contactless payments is forecast to rise almost nine-fold to 12.2 billion in 2020, and RBR forecasts the number of contactless cards in issue to treble between 2014 and 2020 to just short of 700 million cards, representing more than 40 per cent of the total regional card base.

future of contactless2

Source: Global Payment Cards Data and Forecasts to 2020 (RBR)


Contactless mandates

There were 2.5 million contactless-enabled terminals in Europe at the end of 2014, representing 16 per cent of all EFTPOS terminals in the region. That figure is set to soar as both MasterCard and Visa have insisted on all new terminals being capable of accepting contactless transactions by the beginning of 2016 and all existing terminals should be contactless by the beginning of 2020.

Furthermore, the interchange fee for contactless cards in many countries is lower than that for other payment cards, which will also encourage growth in acceptance generally and in contactless acceptance in particular, as some retailers sign up to accept cards for the first time and others replace older terminals.

RBR believes that contactless will continue to spread throughout the region aided by the card schemes’ mandates for terminals to be capable of accepting contactless transactions. At some stage there will be a tipping point, after which the movement to contactless will be extremely quick. That point has not quite been reached, but it is becoming closer all the time.

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