Barclaycard: Contactless to Reach ‘Big Tipping Point’ Next Year

UK-based Barclays bank and its credit-card arm, Barclaycard, will have issued a total of 20 million contactless debit and credit cards by the end of 2011, predicted James McDonald, head of strategic innovation programs for Barclaycard, who said he believes there will be “many millions” of contactless transactions in the United Kingdom next year.

The bank, which is almost single-handedly driving the UK’s contactless rollout, will have issued a total of 12 million debit and credit cards by the end of this year, accounting for nearly all contactless cards on issue in the UK by year's end, McDonald said. But he expects such other British banks as Royal Bank of Scotland, HSBC and Lloyds TSB to become more active in the rollout by next year, for a total 30 million British contactless bank cards issued by the end of 2011. Barclays and Barclaycard to date have issued a combined 7 million debit and credit cards since launching the rollout in September of 2007.

McDonald, speaking this week at the Contactless Cards and Payments conference in London organized by SMi, also predicted merchant acceptance would “dramatically increase” over the next 18 months. With more and more contactless cards in circulation, merchants, including big supermarket chains, are becoming interested, said McDonald, who works for Barclaycard’s merchant acquiring business.

“Those conversations (with merchants) are very different now than they were last year,” he told the conference. “We do believe large retailers will follow. There is a big tipping point coming up next year.”

But he declined to name large merchants he believes will accept contactless payment by next year.

There are about 24,000 merchant locations equipped to accept contactless payment in the UK, from dual-interface EMV cards with either a Visa payWave or MasterCard PayPass application onboard. While only a quarter of these locations are in London, they have accounted for 82% of transactions to date, McDonald said.

Most of the transactions are with small- to medium-size quick-service food or coffee chains, such as EAT, Caffè Nero and Pret A Manger. The only major chains accepting contactless so far, such as Boot’s retail pharmacies, have barely dipped their toes in the water. They are only accepting contactless on a trial basis. 

He predicted supermarket chains will begin accepting late this year or early next year.

He did not name the chains, but contactless-payment backers are hoping such major chains as Tesco and Sainsbury’s take the plunge. Any adoption by the supermarkets would likely begin slowly.

McDonald said transactions overall have averaged £4.5 (US$6.75) compared with £2.50 to £3 average cash transactions, indicating consumers spend more with contactless cards. But there were only some hundreds of thousands of contactless transactions recorded in the UK in 2009 and transactions only ran into the several tens of thousands in 2008, said McDonald. They should increase to millions this year, before starting to ramp up in 2011. 

He predicted by 2012, there would be more than 50 million contactless cards on issue from all banks, including Barclays' and Barclaycard's entire combined base of 25 million cards. There would be hundreds of millions of transactions, including some from NFC phones, with about 30% of retail outlets in the UK covered, he predicted. By comparison, in the United States, a much larger market, banks have issued more than 200 million much cheaper non-EMV contactless cards during the first five years of their rollout, which began around 2005. There are roughly 75,000 contactless merchant locations at present, or less than 2% of card-accepting merchant outlets covered. The card numbers include replacement cards.

By 2015, all the banks in UK would be issuing contactless, totaling more than 100 million cards, with billions of transactions, predicted McDonald.

The rosy projections rely in part on Transport for London accepting payment directly from EMV bank cards. That could begin on buses in London and also by bus operators in Manchester as early as next year and expand to the London Underground in 2012, said McDonald.

While not out of the realm of possibility, it is unlikely Transport for London would be accepting EMV payments, even on buses, by next year, Lauren Sager Weinstein, head of Oyster development for Transport for London, told NFC Times.

The giant transport authority wants to accept bank payment for most of the fares it now collects on 8,000 buses and on its large Underground network and other modes of transport, and a move in that direction looks promising. But the authority has not yet made a final decision, she said. If it goes ahead with the plan to accept open-loop payment of fares, buses, which charge flat fares to ride, would likely accept contactless EMV cards before the Underground, which has a more complex fare structure. 

McDonald also reaffirmed Barclaycard’s intention to launch NFC-based mobile payment and related services as part of its partnership with mobile operator Orange UK. The parties have indicated they would launch before the end of the year, but McDonald did not offer a launch date.

And the bank will continue to promote contactless, said McDonald, who played the latest of Barclaycard's popular television commercials to conferees. The ad spot shows a consumer on a rollercoaster swooping through the London skyline, slowing long enough for a quick tap of his contactless Barclaycard credit card for a food purchase. The commercial and ad time cost £2 million to £3 million.

“There will be a lot more of them,” he said. “At Barclaycard, we do believe the industry will follow.”

HEADLINE NEWS

In-Depth: Government Regulation of Mobility-as-a-Service Seen as Necessary to Encourage Widespread Adoption

Apr 16 2020

NFC TIMES Exclusive Insight – Government legislation will likely be needed for widespread adoption of Mobility-as-a-Service, or MaaS, to occur, according to UK-based Juniper Research, which believes that the regulations will be necessary to force MaaS providers, including transit service providers, to work together, as well as to persuade users to get out of their cars to cut carbon emissions.

Apple Pay Expands Support for Interoperable Closed-Loop Transit Cards in China, Though Not First NFC Pays Wallet to Do So

NFC TIMES Exclusive Insight – Apple on Wednesday expanded support for closed-loop transit payments across China, incorporating China’s T-Union interoperable transit cards in its Apple Pay service.

Insight: Virus Adds Urgency to Increasing Contactless Limits but Won’t Necessarily Drive Growth in Acceptance

NFC TIMES Exclusive Insight – While the Covid-19 virus outbreak is building awareness for contactless and NFC payments and is accelerating the increase in already low contactless transaction limits in Europe, it remains to be seen how much it will convince more merchants to accept contactless in the U.S.

Exclusive: After 10 Months, Sales of Public Transit Tickets in Uber App Still Make Up Small Share of Mobile Ticketing in Denver

Mar 24 2020

NFC TIMES Exclusive – Since last May, when ride-hailing service Uber officially began enabling customers to book and pay for public transit tickets in Denver directly in the Uber app, use of the service remains relatively low, accounting for less than 3% of all mobile tickets purchased by customers of Denver public transit agency RTD, NFC Times has learned.

Former Garmin Pay Technology Providers Sue Device Maker Claiming Unpaid Millions, Though Offer Scant Proof of Claims

NFC TIMES Exclusive –  The founders of former payments wearables provisioning company Fit Pay, which was acquired last September for $3.3 million by smartwatch and fitness band maker Garmin, have sued the device maker and two other parties, claiming they are owed millions in missed earn-out payments.

Helsinki to Roll Out Multimodal Contactless EMV Fare Payments, with Plans for Daily and Weekly Fare Capping

Mar 12 2020

NFC TIMES Exclusive Insight – The Helsinki Regional Transport Authority plans to accept contactless EMV payments on its multimodal system, including its buses, metro, trams and ferries. The rollout, expected to be completed in 2023, will also support daily and weekly fare capping.  

Transport for London’s Lucrative Sponsorship Deal with Google Shows Value of ‘Point of Sale’ Real Estate at Fare Gates

NFC TIMES Exclusive insight – Transport for London’s recent deal with Google to put the Google Pay Logo on more than 5,600 contactless gate readers across the large London Underground network is not the first time that the London transit authority has rented out its prime payments real estate to sponsors. Nor is it the only transit agency that has profited from sponsorship deals tied to its contactless EMV transit payments services. 

Amazon Launches Largest Checkout-Free Store; Clerks and POS Terminal Vendors Need Not Worry…Yet

NFC TIMES Exclusive Insight – Ecommerce giant Amazon expanded its no-checkout concept to its first “full-sized” supermarket Tuesday, in its headquarters city of Seattle, enabling shoppers to scan an app upon entering, pull products off of shelves and “just walk out,” with hundreds of cameras and numerous sensors having recorded everywhere the shoppers went in the store and everything they put into their shopping carts. A card on file in the app is charged as the customers leave.

Czech Banks See Growing Use of NFC Wallets with Smartphones and Wearables for Contactless Payments

Feb 18 2020

NFC TIMES Exclusive Insight – Banks in the Czech Republic say they are seeing significant and growing use of NFC-enabled smartphones and wearables, ranging from 6% to nearly 25% of all contactless payments–three banks told NFC Times–although a large majority of consumers continue to tap their contactless cards, not NFC devices, for in-store payments.

Brussels Transit Operator Sees Need for Global Interoperability of Fare Payments; Compares Benefits to Mobile Roaming

NFC TIMES Exclusive Insight – The head of information systems for a major European transit operator says he believes public transit agencies should support interoperable fare payments globally, like mobile network operators offer roaming when their customers travel abroad.

Oyster Card Here to Stay Despite Strong Growth of Contactless Fare Payments in London

NFC TIMES Exclusive Insight – As more and more transit authorities globally seek to emulate Transport for London’s success in gaining widespread adoption for contactless open-loop fare payments, they should take note that London’s closed-loop Oyster card remains popular, even among visitors to the city.

In-Depth: Tokenization Figures Demonstrate Majority of Mobile Payments Conducted Online

NFC TIMES Exclusive Insight –  Recent research and forecasts have confirmed what industry observers already knew: Despite concerted efforts by the Pays wallets to gain widespread use of mobile payments in the U.S. at the physical point of sale, the large majority of mobile payments are conducted online, not by tapping NFC phones or wearables in stores.