PAYMENTS: CONTACTLESS
Hands up for RBR forecasts that the pandemic-accelerated shift to tap-and-go payments is likely to continue – even among slow adopters like the USA, says analyst Gillian Shaw COVID-19 has acted as a catalyst that has accelerated many changes in banking and payments that were already underway. Of all these changes, such as the increased use of online banking and the ecommerce-driven shift to electronic payments, it is perhaps the switch to contactless that has been most noticeable in everyday life. With social distancing critical, both consumers and merchants alike have shown a strong preference for tap-and-go payments. Enabling faster transaction times and reducing the need for shared physical touchpoints (such as the handling of cash or the touching of card terminals), the adoption of contactless has increased significantly since the crisis began. Although accelerated by the risks of the pandemic, RBR’s Global Payment Cards Data And Forecasts To 2024 report reveals how increased contactless card issuance and acceptance, combined with changes in consumer behaviour, were already driving growth in contactless payments. One of the most important factors is the increase in the number of contactlessenabled terminals globally. In China, by far the largest payment card market, the government’s mandate for terminal upgrades has had a significant impact on the adoption of contactless card payments.
Contactless journeys The number of contactless cards is increasing worldwide but different countries are at varying stages on the path towards universal contactless issuance.
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TheFintechMagazine | Issue 17
Despite the first contactless cards appearing in the UK as far back as 2007, they are relatively new in countries such as Indonesia and Argentina. Asia-Pacific is by far the largest region in terms of the number of contactless cards, accounting for 83 per cent of the global total in 2018, with China again leading the pack. Western Europe has the second-largest number of contactless cards, with some countries ahead of others – in Greece, for example, almost all cards have contactless functionality and most transactions are of the tap-to-pay variety, with customers only touching the terminal to enter their PIN when they exceed the €50 limit. In North America, there are differences between Canada and the USA; whereas Canadians are among the most enthusiastic adopters of contactless globally, consumers in the USA have been slower to embrace it, with contactless card issuance lagging. In 2018, contactless accounted for just five per cent of all issued cards in the USA. However, as the COVID-19 pandemic has spread and consumers and merchants seek quick and low-contact ways of paying, the number of contactless payments in the USA is surging and most of the big card issuers there are actively rolling out new contactless cards to customers.
Upping the limit Contactless payments have typically been used for lower-value purchases, such as drinks and snacks, and, as a result, have been displacing cash at the point of sale. In order to prevent fraud on stolen cards, contactless payments are subject to a spending limit, although contactless mobile payments often have higher limits than those made with cards, as they involve additional security such as a fingerprint, facial scan or a PIN keyed into the device. The COVID-19 crisis has seen the raising of the contactless limit in a number of countries to facilitate quicker and easier payments, for example from £30 to £45 in www.fintech.finance