UK Contactless Payments: What is the Truth

As an ex Saatchi and Saatchi Advertising Man sometimes I think I look at the world differently to many other business people in payments. We were taught early on that ‘Perception is reality’. It does not matter what you say, or what the product does; what matters is what the user/consumer perception of that product is.

Why is this important well Visa and MasterCard have for a long time been shouting about the success of NFC/Contactless Cards in the UK. If we look at the UK market today there are circa 170 million cards in issue of which:

• 88.6 million Debit cards

• 59.7 million Credit cards

• 6.6 million Charge cards

• 17.4 million ATM-only cards

Currently 91% of the UK adult population have a debit card and were used to make 50% of the value of UK retail sales. Even with credit cards 61% of the UK adult population have a credit card. The UK can thus be said is a highly card penetrated market.

When it comes to contactless cards at the same date point there were some 32million cards in circulation in the UK; this means that approximately 21% of debit, credit and charge cards were contactless. However given circa only 60m adults and thus a debit/credit/charge ration of circa 2.5 cards per person, it would be reasonable to say that circa 50% of all adults in the UK have a contactless card in their wallet.

And the macro figures certainly seem to bear out the growth in contactless with it being reported that there are 125 NFC transactions every minute or about 70?million a year. This accounted in 2013 for about £609 million worth of total spending by cardholders.

But research just out by Compass Plus seems to be in question the macro figure or rather the assumed penetration. They stated that 70.7% of consumers researched do not have a contactless-enabled card in their wallet. The key there is this is the consumer’s perception/belief. No one actually checked their wallets and cards. As might be expected the group with the highest number of enabled cards were those based in London, however this figure only reached 37.2%, which means that over 60% of Londoners still do not perceive they have a contactless card. Nottingham and Sheffield had achieved 30% penetration, whilst Wellingborough, located in the London commuter-belt, fell behind at 23.5%. If we then look at the YouGov research in April 2013 they found awareness of contactless cards had grown from 55% to 70%, but acknowledged ownership was still only at 25%.

Assuming the Compass Plus research is accurate there are a number of conclusions that can be drawn from what appears to be conflicting data:

1 Consumers understand/are aware of what contactless is

2 Consumers do often recognise they have a contactless card in their wallet

3 A relatively small number of consumers that do use contactless are using it heavily thus driving the overall macro spend numbers

The implications are clear, banks, retailers and other people involved in the contactless ecosystem need to do more to educate consumers on the fact they have a contactless card in their wallet, what to look for. As perception is reality and currently most consumers do not perceive they have a contactless card in their wallet despite the macro data pointing to the fact they do.