The duel between cash and contactless has reached a new peak recently, with parties on both sides making the case for the longevity and relevance of each payment method, says Adam Holt, head of retail at Ingenico.
He said: “On one side, ‘cash champions’ have stated that cash shows no sign of dying out – in fact according to Ovum, the amount of cash in circulation is continually on the rise, citing European Bank figures that there are over 40% more dollar bills in circulation in the US than at the beginning of the millennium – a startling figure, says Holt.
“On the other side, contactless advocates have proposed that the era of contactless is finally here – Visa has increased its contactless card issuance this year to 12 million from eight million, and a recent survey from MyVoucherCodes found that 72% of Brits are in favour of contactless technology in all supermarket stores. Contactless payment has even made its way into schools, with Nottinghamshire County Council providing payments cards for children to buy school meals with sQuid.
“While it is unlikely that cash will become obsolete, contactless is poised to corner the market in low-value transactions.
“Despite Datamonitor’s recent report that retailers have been slow to adopt contactless technology, a number of larger retailers have already demonstrated its success – greatly benefiting from contactless’ queue-busting benefits.
“Recent research from Barclaycard has found that despite our collective reputation for a love of queuing, British consumers are only willing to queue for two minutes, a decrease from five minutes six years ago. This queuing period will be crucial for retailers to transform queues into transactions – which contactless can aid.
“Chains such as Pret A Manger, EAT and Cafe Nero have implemented the technology to great success. These early adopters have experienced an increased average spend of up to 33%, in addition to substantially faster transaction times and higher footfall, which has shown that there are substantial benefits to be gained.
“The key in the near future will be to maximise low value transactions – with nearly 80% of all transactions under £10, outlets such as Pret A Manger, where quick turnarounds are essential to the business, will be a key proving ground for contactless.
“The increase of the contactless payment limit to £15 in February 2010 gave contactless adoption a shot-in-the-arm as it further increases the proportion of cash transactions that can be undertaken, while enhancing many business cases for contactless rollout.
“The key on both sides of the transaction is education,” he said. “Retailers need to be further educated about the benefits, and what contactless technology can do for their business. With research by US firm CVS showing that a contactless payment can be completed in only 12.5 seconds, compared to cash and chip-and-pin transactions taking an average of 34 and 27 seconds respectively, the opportunity for queue-busting is huge.
“In parallel to this, as long as both retailers and card issuers collaborate to help customers understand the benefits and how to use their cards, contactless transactions will spike.
“The recent announcement that contactless technology will be increasingly used at festivals and similar events, will increase consumer exposure to the technology and the convenience it brings – after all, who wants to carry pockets of change around at Glastonbury?
“Of course. contactless payments are not only limited to cards. NFC elements in mobile phones have been used to pay for goods. Once contactless cards are fully integrated and ingrained in society, using mobile phones for payment will only follow suit,” said Holt.
Source: Ingenico
