The Rise of Contactless And Mobile Payments

The amount of money spent using mobile payments tripled in the first half of 2017, yet a HH Global study found that just 1% of the people they surveyed said that they would use their mobile phone as a way of paying for a purchase.

Despite this, mobile payments look set to rise with tech giants Android, Apple, and Samsung all getting on board with mobile payments, allowing customers who own one of their smartphones to purchase items using their mobile phones rather than relying on the traditional methods of cash or credit/debit card payments.

Millennials (those aged 18-35) are less likely than their older peers to carry cash or use it to purchase items, and this seems to be having an impact on the amount of transactional spending overall. Last year saw card payments overtake cash payments for the first time ever, and many of these card payments make use of contactless technology, with an estimated ⅔ of people having used contactless technology to make a payment in the last decade.

Some people are worried about the impact that contactless and mobile technology is having on our willingness to spend money: studies have shown that people who spend money using contactless technology are less likely to experience the psychological feeling of loss that comes with spending money the traditional way. Mobile payments, which don’t require the use of a card/money, and so don’t even require that you get your purse or wallet out, are likely to exaggerate this feeling even more.

But for retailers, bar, pub, and restaurant operators, the decrease in cash payments and the rise in contactless and mobile technology could spell good news. A study showed that retailers who introduced contactless technology saw a 30% rise in the number of transactions processed each day. This is likely to do with the speed and ease of contactless payments: it’s easier and quicker to simply touch your credit or debit card against a card reader than it is to enter your pin. More transactions per day means more total revenue generated, demonstrating that retailers are potentially limiting their profitability by not having contactless technology available for their customers to use.

For those using their contactless cards to pay for items in the pub, it’s easy to see how a number of transactions could quickly rack up when cash isn’t there to be spent (or to run out of!). Contactless works especially well in places like pubs because the £30 spending cap isn’t likely to be an issue: customers can buy drinks again and again without meeting the limit for any one transaction.

We can expect to see contactless and mobile technology used more and more frequently in the future: with card payments over taking cash payments for the first time ever in 2017, 2018 looks set to see this rise even further, and with tech giants Android, Apple, and Samsung all getting on board with mobile payment technology, 2018 may very well be the year when people start going without notes, coins, and plastic all together.

From a loyalty perspective, companies like Fidel can now link card purchase to a loyalty account, ensuring that even if the customer forgets their loyalty card they can still be issued with points. This is less useful however, as you don’t collect basket information connected with the purchase.

As for the future, the take-up of mobile as a digital wallet will enable retailers to have a one-tap experience with customers, payment, and loyalty combined in a single action. Wallet allows you to store loyalty cards, vouchers, and coupons in your phone outside of having to invest in an app. Android Wallet and Apple Wallet pre-exist for this purpose.