CEO Insights: Contactless Payments On The Rise Globally
The headline says it all. Reports from a variety of sources indicate that contactless payments have risen greatly over the past 12 months and there doesn’t seem to be any signs of slowing down. The UK Cards Association said back in January that 25 percent of all card payments in the UK were now contactless. Just one year prior, only 11 percent of transactions were contactless. With 101.8 million contactless debit and credit cards in circulation in the UK, contactless card use is on the rise.
The UK Cards Association said back in January that 25 percent of all card payments in the UK were now contactless. Just one year prior, only 11 percent of transactions were contactless. With 101.8 million contactless debit and credit cards in circulation in the UK, contactless card use is on the rise.
In the United States, contactless payments are also on the rise, but in another way. Whereas Europe and other areas of the world have a head start on the US concerning EMV, related infrastructure upgrades, and contactless card issuance, the US still has a way to go with contactless cards. According to some sources, only 10 percent of the payment terminals in the US are NFC-enabled for contactless payments. Additionally, the higher cost to manufacturer and issue contactless cards has created a financial barrier. The volume of cards in circulation in the US (1.2 billion cards issued by 12,000 different institutions) constitutes an expensive upgrade many institutions aren’t eager to address — particularly having just upgraded cards to EMV.
Consumers are using them not with contactless cards, but with smartphone payment applications such as Apple Pay, Android Pay, Samsung Pay, and others which leverage the NFC capabilities now baked into their mobile devices.
So how is contactless on the rise in the US? While only 10 percent of payment terminals in the US are NFC-enabled, that still equates to more than 1.6 million NFC-ready terminals. Consumers are using them not with contactless cards, but with smartphone payment applications such as Apple Pay, Android Pay, Samsung Pay, and others which leverage the NFC capabilities now baked into their mobile devices.
BI Intelligence, Business Insider's premium research service, put together a report on the forecasted growth of mobile payments in the US. The key takeaway worth noting: Volume will reach $75 billion in 2016 and will pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80 percent between 2015 and 2020.
Americans aren’t the only ones falling in love with mobile payments. According to Visa’s 2016 Digital Payments Study, 54 percent of European consumers regularly use their mobile device to make payments. The number tripled from the previous year. Interestingly, some of the most significant adoption has taken place in developing markets such as Turkey and Romania, who are leapfrogging traditional payment methods to catch up.
Contactless payments don’t just take place within retail; they’re happening anywhere payments are accepted. For instance, UK-based Reading Buses recently worked with Creditcall to enable EMV contactless card acceptance as well as Apple Pay and Android Pay on approximately 180 buses (totally 66,000 customer journeys a day) in Reading and the surrounding area. This is just one example of how contactless payments are gaining widespread adoption.
How can software developers keep up?
Contactless payments are on the rise worldwide so it behooves developers to ensure their offerings address this burgeoning payment method. Unfortunately, for many software developers and integrators, keeping up with the latest trends in payment technology can not only be daunting, it can steal valuable time and resources away from creating value-added features and improvements. If you need to address contactless payments and other payment innovations but don’t know how to do it quickly and affordably, contact Creditcall to learn about our APIs and support services. With one simple integration, you can put payments behind you and focus your attention back to your product.
Insights from Lars Pedersen, Creditcall CEO