Contactless has been the focus of much attention in the payments industry over the past few years, yet only a small proportion of suitable European card payments are contactless, suggesting significant potential for growth, according to a newly published study, “Global Payment Cards Data and Forecasts 2013–2019,” from research and consulting firm RBR.
Contactless cards can reduce transaction times
Contactless cards use radio frequency identification technology to communicate with a reader through a simple tap, and with no need to enter a PIN for transactions below a certain value — currently 20 pounds ($30) in the U.K. and 24 euros ($28) in Europe. Contactless is intended to speed up transactions and displace cash for low-value payments.
Visa is the largest contactless scheme
Europeans held 133 million contactless cards at the end of 2013. Visa branded 56 percent of contactless cards in central and eastern Europe and 58 percent in western Europe, accounting for 63 percent and 57 percent of contact payment volumes, respectively. The remaining cards are mostly MasterCard PayPass and Maestro PayPass, with a small proportion of Amex ExpressPay and domestic cards.
Contactless is gaining traction in some countries
In absolute terms, the U.K. is the largest European market for contactless cards, accounting for more than a quarter of the regional total. The next three largest markets are France, Poland and Turkey. Together, the four countries account for almost two-thirds of Europe’s contactless card total.
Contactless card use is growing
The Czech Republic and Poland are the only relatively large contactless markets with more than 10 contactless payments per card in 2013. Slovakia also has relatively high use levels with seven contactless purchases per card. Transaction volumes in these countries are closely linked to broad acceptance networks.
A MasterCard and Visa mandate for all new devices to support contactless will help drive growth in the U.K. in the coming years. Major retail chains and the London transport system having already completed their upgrades for contactless.
Contactless could facilitate a move to mobile payments
Some experts believe that in certain countries (e.g., Belgium and Germany), the industry will bypass contactless and move straight to mobile for low-value purchases. In other countries, contactless cards are seen as a step towards mobile payments.
Obstacles remain
The main challenge is to offer merchants terms and conditions that compare favorably enough with traditional cards that they will be willing to make potentially expensive terminal upgrades.
Another barrier to contactless is the difficulty of breaking the cash habit, RBR concludes.
(http://www.atmmarketplace.com/news/rbr-study-finds-significant-potential-for-contactless-in-europe/)
