Future of Payments
Contactless sales surge as transaction costs fall
4 October 2016 |
Spending on contactless cards in the first half of 2016 has already outstripped contactless spending for the whole of 2015, according to figures from The Cards Association.
There were 1.1billion contactless transactions in the first half of the year, compared to 1.05 billion for the whole of 2015. Some £9.27billion was spent using contactless methods between January and June of this year, more than the total 2015 contactless spend of £7.75billion. Contactless card payments accounted for 18 per cent of total purchases in June in contrast to seven per cent in June 2015. The average contactless transaction was £8.60 in both May and June this year.
Richard Koch, head of policy at The UK Cards Association, said: “Contactless cards are firmly entrenched as the preferred way to pay for millions of consumers, who expect to be able to use them for everyday purchases. We anticipate the use of contactless cards will continue to increase, particularly as charities and transport operators outside London recognise the benefits this technology can bring.”
Payment card spending reached £53.1billion in June, £0.4billion more than in May. Both spending and the number of payments increased in the second quarter of the year, with 92 million more purchases and £1.9billion more spending than in the first quarter of 2016.
The number of card payments within the retail sector increased by 5.2 million to 799 million, with spending increasing by £134million to £25billion respectively. The majority of the increase came from the food and drinks sub-sector.
Elsewhere the British Retail Consortium (BRC) annual payment survey found cash was used for less than half of all retail transactions across the UK in 2015.
The report looked at the methods of payment UK shoppers were using when buying goods in store and online, how this differs from previous years and the average cost to the retailer for handling each method of payment. It found the use of cash fell five percentage points to 47.15 per cent of all retail transactions in 2015 from 52.09 per cent the previous year. This was the largest drop for five years and means that almost 20 per cent fewer transactions were made with cash than in 2011.
Tom Ironside, director of business and regulation at BRC, says: “Though the use of cash has been in decline for some time now, this year it has seen a significant dip. Crucially, retailers are seeing cash used in under half of all transactions for the first time, marking a real watershed. However, cash remains an important payment method for many customers and will be with us for years to come.
“It seems that more and more of us are turning to our debit cards to make payments, especially as new contactless technology is proving incredibly popular for those lower-value transactions that used to be the mainstay for cash.
“This change has been made possible by retailers investing heavily in new payments technology making it easier and quicker for customers to securely complete transactions in store. Card issuers are also driving this change in customer behaviour, with around 55 percent of cards currently in use now featuring contactless technology.”
The BRC also found the cost of handling debit and credit card transactions for those retailers participating in the survey had reduced by around £159million. These savings were due to early changes made available to some retailers by debit and credit card schemes in advance of the implementation of the new Interchange Fee Regulation. The full impact of the changes under the regulation should be experienced by all retailers from 2016.