Visa Europe continues to promote its contactless progress, especially the UK market–noting that spending with its Visa payWave application increased five-fold in June.
While the spending with contactless remains small compared with total card spending, it signals a ramp-up in the UK and, to a lesser extent, in Europe for Visa.
Visa payWave users in the UK conducted 51 million contactless transactions between June 2012 and June 2013, spending a total of £338 million (US$529.5 million). These purchases accounted for roughly a quarter of Europe’s total contactless spending among Visa users of €1.5 billion during the period, and slightly over a quarter of the continent’s 187 million total Visa contactless transactions.
By comparison, Visa recorded €1.2 trillion (US$1.6 trillion) in total spending on its cards in Europe and 30.1 billion transactions.
The card scheme is highlighting its UK contactless growth, where it is particularly strong. The scheme boasted of 280,000 contactless terminals in the UK, which also support MasterCard PayPass. In June, UK consumers made 6.8 million contactless purchases with payWave, a 385% increase year over year from June 2012, which saw 1.4 million transactions. In March 2013, Visa said UK shoppers made 5.3 million contactless transactions with payWave, as NFC Times earlier reported.
The June 2013 contactless purchases amounted to £45.2 million in total spending in the UK, a five-fold increase from the £8.6 million in contactless spending in June 2012. It looks likely the spending will surpass Visa’s earlier predication of average monthly contactless spending of £52 million by the end of 2013.
The June 2013 contactless spending was up from £39 million in March. Visa contactless transactions had increased by 22% during the first quarter, from the fourth quarter of 2012, according to a May 2013 release from Visa Europe.
Average transaction amounts rose 8.3%, from £6.14 in June 2012 to £6.65 ($10.11) a year later. Visa payWave contactless cards allow consumers to tap to make purchases of £20 or less without a PIN or signature.
Visa also reported that 28 million cardholders in the UK now have a payWave enabled contactless card, up from 26.9 million in May 2013. These 28 million cards account for 43% of the total of 65 million Visa contactless cards in Europe, up from 58 million in May 2013.
Banks and other issuers in Europe also issue open-loop contactless bank cards, supporting MasterCard PayPass and, to a limited extent, American Express ExpressPay. At the end of 2012, the UK Card Association reported a total of 31 million contactless cards from all brands, mostly Visa and MasterCard, on issue in the UK, indicating that Visa’s payWave holds a considerable share of the UK contactless payments market.
MasterCard is showing strong growth in such countries as Poland and others, especially in Central and Eastern Europe.
The increased contactless infrastructure and use by consumers of cards could clear the way for mobile NFC transactions in Europe, which Visa and MasterCard are also pushing.
While use of contactless is clearly growing in the UK, it’s still an emerging payment technology. According to a survey by ICM research, carried out between Nov. 30 and Dec. 2, 2012, 25% of UK consumers had contactless cards, but only 8% used them–and less than 4% tapped to pay at least once a week.
Rollouts by banks and merchants are a crucial factor in take-up.
UK merchants including Boots, Co-Op, Costcutter, EAT, McDonalds, Marks & Spencer, the UK Post Office, Pret A Manger, Starbucks, and WHSmith have rolled out contactless and account for many of the total of 280,000 contactless point-of-sale terminals nationwide, up from 232,000 in May 2013. The UK terminals represent about 28% of Europe’s total of roughly 1 million contactless point of sale terminals, up from 797,000 in May 2013.
Visa and MasterCard are believed to have been subsidizing these terminals in countries such as Poland, and that may be taking place to some extent in the UK. In addition, large acquirer and contactless backer Barclaycard, part of Barclays bank, has been adding contactless to the terminals it rolls out to small merchants for years.
In June 2013, Starbucks completed deployment of contactless point of sale terminals at 550 of its over 700 coffee shops in the UK, following a pilot at selected locations, which the company announced in May 2011.
In May 2013, the UK Post Office announced it had deployed 30,000 contactless terminals throughout its 11,500 branches, becoming Europe’s largest contactless payment accepter in terms of both locations and terminals.
Earlier that month, large retailer Marks & Spencer completed its rollout of contactless terminals to 644 of its over 700 UK stores. The company said in a statement that its stores handled an average of 23,000 contactless transactions per week, with the highest levels of uptake occurring at its London stores. Contactless transactions at the time accounted for 14% of transactions under £20, according to the retailer.
Last December, Transport for London rolled out open-loop contactless acceptance for fares on its more than 8,000 buses, and said that it plans to expand contactless payment to its other modes of transport, including London’s Underground, by the end of 2013. In its recent announcement, Visa Europe said payWave cardholders had paid contactlessly for 3 million London bus rides since December. That’s still a small percentage of total rides, which Transport for London estimates at 6 million bus passengers each day.
On the other hand, UK retailer Tesco, the largest merchant in the country, tried contactless payment at 30 stories in 2012, but remains in “wait-and-see” mode regarding contactless payment in general and NFC in particular.