Barclays PLC continues to dominate the United Kingdom's contactless payment market, claiming 88% of the U.K.'s total base of 12.9 million contactless debit- and credit-card holders at the beginning of the year.
But competitors are poised to begin chipping away at market share, as observers expect the number of contactless cards in circulation in the U.K. to nearly double by the end of 2012.
Numerous merchants, along with London's transit agency Transport for London, announced plans in 2010 to add contactless payment options over the next year as part of a national push to broadly expand contactless card acceptance in time for the London 2012 Olympic Games.
Lloyds TSB Bank PLC earlier this month announced plans to issue about 1 million contactless debit cards this year to U.K. account holders. And MBNA Europe Bank Ltd. in October announced a two-year initiative to issue 5 million contactless credit cards in the U.K.
Barclays, which in 2007 began distributing contactless cards in the U.K., said Thursday that it had 11.4 million contactless card holders at the beginning of the year, and the total number of contactless transactions it processed through the end of February increased 150%, compared with the same period a year earlier. The firm did not disclose the specific numbers of transactions processed.
More than 1.7 million contactless transactions were processed in the U.K. in 2010, according to the U.K. Cards Association. Reliable contactless transaction data from previous years is unavailable "because the market is so new," an association representative said.
The 12.9 million contactless debit and credit cards in circulation in the U.K. represent a 72% increase, from 7.5 million a year earlier, the association said. The organization projects the total number of contactless cards in circulation to soar by more than 90% over the next year, reaching 25 million by the end of 2012, a representative said.
Barclays and Barclaycard customers may initiate transactions valued at up to $26 at payment terminals equipped to read contactless chips. Card holders do not need to enter a PIN, which speeds transaction-processing time at the point of sale. Payment cards in the U.K. support EMV chip-and-PIN functionality.
The firm says it has helped merchants install more than 52,000 contactless payment terminals in the U.K., more than double the number Barclays said existed at the beginning of 2010.
Restaurants and entertainment channels are driving the heaviest use of contactless transactions, a Barclays representative said. National quick-service restaurants, including Pret A Manger, Subway and EAT, are among the major chains that accept contactless payments, along with London entertainment venues Wembley Stadium and The 02.
The Co-operative Food, a major U.K. grocery chain, last year said it would introduce contactless-payment acceptance at its stores this year, and McDonald's Corp. in January announced plans to do the same at its 1,200 U.K. stores this year.
"The range of retailers offering contactless payments [in the U.K.] grew significantly in 2010, but this is still only the beginning," Richard Armstrong, Barclaycard head of U.K. payment acceptance, said in a press release.
