The change to contactless payments was already a growing trend but recent focus on sanitisation and distancing has created a increased rate of adoption. Authorities in many areas have raised the cap on contactless card transactions to £45 (in the UK) as I direct response.
Payment cards that perform dual-functions, inserted, swiped and contactless are beneficial to both consumers and businesses and the rates of adoption of contactless card payments have been much higher than than the change to “Chip & PIN” card payments years ago.
Why Contactless Card Payments?
Financial institutions made the shift from the old magnetic strip technology to Chip and PIN to reduce the likelyhood of fraudulent transactions and this system has been successful for many years
Whereas fraud liabilities incentivized financial institutions to shift from magstripes to Chip and PIN, contactless cards may not seem like a critical need. According to recent industry figures it is reckoned that only around 15% of company execs are prioritising increased adoption of contactless payment systems as a priority.
In reality, maximising monetisation from contactless payments should be a priority as their popularity will only rise. People like the ease-of-use that contactless payments bring, and peace-of-mind with regard to sanitisation here together, in “the new normal”.
VISA recently expanded on the research into contactless payments, conducted in early 2021 with the following statements:
1. British consumers can shop in the way they want
Consumers and businesses alike are looking forward to a time when restrictions ease and our high streets are back open. When this happens, it will be crucial that people are provided with the confidence that returning to the high street will be a positive experience.
Consumers increasingly prefer to tap to pay when shopping, eating out or travelling on public transport. Recent Visa data shows that eight in ten in-person payments are contactless1. Our Back to Business study also revealed that across the world nearly two-thirds (65%) of consumers would prefer to use contactless payments as much as, or even more than, they are currently. With the new contactless limit of £100, almost all card transactions, including typical purchases like a weekly grocery shop, to avoid the need for Chip & PIN. This gives people the choice to pay in the way that is right for them.
2. Contactless is a secure way to pay
Visa rigorously monitors payments fraud across the world and contactless remains one of the most secure ways to pay, with one of the lowest fraud rates of any type of payment. Despite the contactless limit rising by 50% last year, there has been no rise in fraud rates3 with the European contactless fraud rate remaining below 0.01%.4 Furthermore, other countries, such as Australia, Singapore and Canada have successfully increased limits to over £100, with fraud remaining low.
Contactless fraud can only be attempted physically using a lost or stolen card. Regardless of the contactless limit, all transactions are subject to sophisticated real-time analysis when they are approved, and banks can block them or request a PIN to authorise the transaction in case of suspicious activity.
Many of the things people fear, such as fraudsters using mobile payment terminals to “skim” the details from your card, are in reality incredibly unlikely. And if you do suspect you might be a victim of fraud, then Visa’s Zero Liability Policy provides a guarantee that you won’t be held responsible for any unauthorised payments made with your card or card details.
3. The higher limit will help support the economic recovery
Contactless payments are popular and secure. With many small businesses having had a challenging past year, it’s going to be crucial that footfall returns as soon as possible. The new £100 limit will help retailers, especially many small stores, get back on their feet by increasing sales and in turn contribute to our economic recovery.
We believe the decision to increase the limit to £100 is a positive move for British shoppers and high streets alike. We stand ready to work with our clients and partners to support the Government and the FCA to make this happen as soon as possible, so both consumers and retailers can benefit as the economy opens up.
Source: VISA Feb 9, 2021
With current trends indicating the adoption of contactless card terminals at well over 60% in the marketplace, contactless card payments seems to be the direction in which the card payments industry is heading.