McDonald’s UK Embraces Contactless, Adding Momentum to UK Rollout

Jan 21 2011

McDonald’s has announced it will accept contactless payment at its 1,200 restaurants throughout the United Kingdom, one of the first tier-one merchants to embrace the technology in the country.

McDonald’s UK said it will be ready to start accepting contactless payment cards by summer, after it finishes a general overhaul of its point-of-sale terminal system, implemented by IBM.

The move will offer needed momentum to the country’s rollout of contactless payment, launched in September 2007. The rollout is mainly progressing thanks to just one bank, Barclays and its credit card unit Barclaycard, which have funded most of the cards and terminals rolled out to date. Barclaycard is both an issuer and acquirer.

McDonald's was one of the first merchants to adopt contactless payment in the United States, agreeing more than five years ago to begin to roll it out nationwide. It received help from such card schemes as MasterCard Worldwide, which subsidized terminals.

McDonald’s UK works with another major acquirer in the United Kingdom, WorldPay. And the fast-food chain said it will launch contactless payment in the United Kingdom with the help of Visa Europe.

A McDonald’s UK spokesman told NFC Times the assistance from Visa will mainly come in the form of promotional support. He said the fact that Visa cut interchange rates for contactless debit transactions early last year was not the reason the chain is adopting contactless.

"It was about convenience and speed of service and bringing enough payment options," the spokesman told NFC Times. He noted the McDonald's locations are nationwide, not just in London, where contactless acceptance points are concentrated. McDonald's UK was the first major fast-food chain in the country to accept conventional payment cards, in 2007, he added.

There are just under 45,000 contactless point-of-sale terminals in place in the United Kingdom, according to Barclays. Most are in small merchant chains or single shops.

Last year, however, some larger merchants announced they would at least trial contactless payment, including Co-operative Food, which will launch a pilot this year at 100 of its grocery stores or supermarkets, leading to a possible rollout to the majority of its more than 2,500 stores nationwide in time for the 2012 Olympics in London.

A sister chain, the Co-operative Pharmacy, the UK’s third largest retail drugstore chain, said it would run a pilot early this year at 50 stores with hopes of expanding to more than 500 stores by March of 2011, then possibly the rest of the chain’s 800 stores. Update: Two much larger merchants, retail drugstore chain Boots and mega-supermarket chain Tesco have also expressed interest in contactless and are trialing the technology. Both are likely to roll it out. End update.

And Spar, the largest convenience store chain in the United Kingdom with 2,600 stores under its banner, began rolling out readers throughout the chain last summer. Spar’s merchant acquirer is also The Royal Bank of Scotland.

Roy Ford, retail IT controller and head of card strategy for Spar UK, earlier told NFC Times that lower interchange, on which merchant transaction fees are based, was the top reason Spar is rolling out contactless. The lower interchange will cut debit card fees by 40% when contactless is fully rolled out in the chain, Ford said.

Fees for accepting contactless or any open-loop payment cards is a major reason British merchants have given for holding back from accepting contactless.

But while Visa and MasterCard have both quietly lowered interchange, a rush by merchants to embrace contactless did not follow.

Visa nearly a year ago slashed its rate by half for contactless debit purchases between £2 (US$3.12) and £10, to a flat 4 pence (US 6.2 cents) per transaction. That is compared with a conventional EMV debit transaction with PIN of 8 pence. The Visa payWave debit rate is even less for transactions of £2 and below, though there is no break on interchange for contactless transactions between £10 and £15. MasterCard’s rate for Maestro debit is slightly lower than 4 pence. Rates for similar Debit MasterCard transactions are structured differently, but also are lower than conventional chip-and-PIN transactions.

HEADLINE NEWS

Networks: Contactless Transactions Soar as Pandemic Takes Toll on Cash

NFC TIMES Exclusive Insight – In announcing their respective quarterly results this week, both Visa and Mastercard, as expected, discussed the major disruption that Covid-19 is wreaking on the payments business. But they also noted that there is one unexpected victim of the pandemic: cash.

Prompted by Pandemic Fears, Last of Australia’s Big Four Banks Ends Apple Pay Holdout

May 12 2020

NFC TIMES Exclusive Insight – Citing the increased demand for cashless payments because of the Covid-19 pandemic, Westpac today became the last of Australia’s big four banks to adopt Apple Pay, ending a four-year holdout that had lasted months, even years longer than its major rivals.

Insight: MaaS Backers Believe New Mobility Platforms Could Help Transit Providers Win Back Their Customers’ Trust

NFC TIMES Exclusive Insight – With Covid-19 lockdowns causing mass transit ridership in many cities to virtually fall off a cliff–with such cities as London, New York and San Francisco reporting drops of more than 90%–transport providers worry that some riders may not come back, even after the pandemic ends.

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.