First things first, contactless payment is not a universal standard. The US is anomalous in its resistance to adopting even ‘Chip and Pin’. but maybe, just maybe, contactless payment will leap frog the slow roll out of ‘Chip and Pin’. Estimates put ‘Chip and Pin’ smartcard ownership at just 2 per cent in the US and PEW estimate that 64 per cent of US adults own a smartphone. Credit cards with only magnetic strips are being phased out on October 1, 2015 in the US.
Contactless payment technology is truly disruptive, perhaps too disruptive if the payment method is not baked in to the overall customer experience. The fact that it can be made available to the consumer in many forms; be that wearable bands, smart phones, stickers or the standard plastic card itself means that it is a pervasive payment format that has the added benefit of being cheaper to implement at the vendor level than some ‘Chip and Pin’ options. That said, vendors may wait to see which method of payment wins out in the mass adoption race before they settle on investing in a contactless payment terminal to go with their Square tablet or their other hardware device or dongle or Google Wallet or even Biometric payment scanners etc. etc.
Contactless payment upper limit raised from £20 to £30 in the United Kingdom
In the UK this week, the upper limit of a single spend via contactless methods was raised from £20 to £30 as the average spend on a typical grocery store shop came in at around £22 on average and so the incremental shift had to happen. How long until we creep up to the £50 mark?
Ray Brash, MD & Chairman at PrePay Solutions – the largest issuer of prepaid contactless in Europe, comments: “At the moment, about 15% of our transactions are contactless. With the limit increasing to £30, we predict this will go up to 25% over the next year. The average value of card transactions has been falling for a while now, as people continue to opt for greater convenience and become familiar with the technology. We therefore see no reason why this can’t go up to 50% in the foreseeable future. This steady growth will help contactless take off further and once again shows customer demand for convenience and security.”
Apple Pay and Samsung Pay will become more prevalent in the coming months, there will be data about the amount of transactions that go through the aforementioned systems come Black Friday 2015 and those countries where mobile is the predominant means of accessing the internet will race away with adoption of contactless payment methods.
Does contactless payment embody the frictionless customer experience?
It is the customer experience which needs to win out with the adoption of a new method of payment. It needs to offer all things to all pain points without creating new or additional struggles in the process of payment. That being said, the payment process is not something that can deliver wholesale benefits in isolation. Consumers want the full shopping experience to be loaded with benefit and ease in their favour, not to create struggle or failure. Payment makes up but one small piece.
Research indicates that transactions at the physical checkout still win out over online (for now) but that comes with a basket full of gripes and friction. Contactless payment needs to define itself as a customer experience improving process. Kalixa research indicates that 60 per cent of respondents in their survey cited long queues at checkouts or self-service tills as their biggest frustration when shopping and paying in a bricks and mortar store. In addition, 33 per cent take issue with there being too many stages in the payment process and so the opportunity for contactless payment is abundantly clear.
At the start of this year, Forrester made the bold claim that the wallet itself would become a new marketing platform and opportunity, intrinsically tied in with loyalty programs – think of it as money goes out but opportunity and reward goes in – just how soon this is fully realized is what matters most but for now the hardware is making its way into the hands of the consumer and the technology is feeding into the bigger frictionless customer experience picture.
Have you made a financial transaction via a contactless payment method? Did the experience reduce the friction of the checkout time suck or do you have apprehensions around security and upper limits relating to the new kid on the payment block?