Contactless card use is becoming increasingly popular, and it’s easy to understand why. It allows users to make payments quickly and securely without the need to have cash on hand – just hold your card up at the reader and you’re done. The contactless technology has been adapted to work with different payment types, including credit cards, debit cards, and even mobile phones. Additionally, customers don’t need to sign or even enter a PIN code to use contactless cards, making them even more convenient.
Count the UK among the list of countries where consumers are increasingly preferring contactless payments over cash at retailers and other points of sale. This follows a similar trend in other European countries, such as Sweden and Denmark, where consumers are gravitating to cashless payments. The UK scenario does have some limitations as VISA cashless payments are capped at £30 (US$43). Nonetheless, Visa Europe reports that contactless cards now account for one in seven sales, a significant increase compared with one year ago.
British shoppers are warming to contactless payments, with the use of “wave and pay” cards more than trebling in the past year alone as more retailers offer the technology to their customers. While much of this increase came from the introduction of contactless fares on the Transport for London network in late 2014, the company said the technology had already spread far beyond the capital’s buses and trains.
“Sixty percent of contactless transactions now take place outside the M25, confirming this isn’t just a London phenomenon. At this rate, cash will be seen as a peculiar way of paying for things in as little as five years’ time,” said Kevin Jenkins, UK and Ireland managing director.
Cashless payments overtook notes and coins last year, according to the Payments Council.
Watch for VISA Europe to become a more active player in the EU region as it slated to be sold by its 3,000 member European banks and merged with the US-based and publicly-held VISA, in a deal expected to close in mid-2016. The unified VISA will accelerate the transition from cash to digital and mobile payments and will strengthen its competitive standing in the world of global payments.
Visa Europe’s revenues come from fees from card issuers such as banks; charges for processing sales; and international transaction fees.
The firm, which is owned by more than 3,000 banks, is preparing to merge with Visa Inc, its US-listed sister firm, after 12 years as a separate firm. Visa Inc joined the stock market in 2008, in what was the largest initial public offering on record at the time.
British banks are in line for an estimated £1bn windfall from the sale of Visa Europe, which is set to complete before June. The firm also hopes to work more closely with its American partner on new technology such as Apple Pay, which uses mobile devices to pay in shops.
In the past year, Visa Europe distributed €739m to its owners in the form of rebates and joint-investment initiatives
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Overview by Raymond Pucci, Associate Director, Research Service at Mercator Advisory Group
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