United-Kingdom-based Barclays Group PLC this week continued its goal to bring contactless technology to the region’s masses as it began issuing commercial contactless debit cards to business customers.
Barclays first introduced contactless payment cards in the UK in 2007 through its Barclaycard subsidiary. Since then it has issued more than 2 million contactless Barclays Visa debit and 4 million Barclaycard credit cards.
Barclays in the next two weeks expects to issue between 500,000 and 1 million commercial contactless debit cards to its business customers.
The move is “an important step in the widespread adoption of [contactless] technology,” says Megan Bramlette, managing associate with Auriemma Consulting Group of Westbury, N.Y.
With a contactless payment in the UK, which has converted to chip-and-PIN technology for card payments, consumers pay for items by holding the card against a special reader without having to enter a personal identification number. The purchase price is debited from the checking account or added to the credit card bill, the same way it works for a standard card transaction.
Extending contactless functionality to commercial debit cards was an easy decision for Barclays because “[our business] customers typically have the same spending characteristics as [our] regular customers,” Brian Cunnington, Barclays head of debit cards, tells PaymentsSource. Small and midsize business customers are “stopping for coffee in the morning or buying a sandwich for lunch,” much in the same way other consumers do, he adds.
Visa Europe contends the cards will give businesses more spending control and the ability to track purchases better. “There’s no longer the need [for businesses] to go through piles of receipts, as the business can simply check your expense account and reconcile the figures almost instantly,” Lewis Nolan, Visa Europe vice president of business development, tells PaymentsSource in a statement.
Barclays’ contactless effort, however, does increase the technology’s long-term viability. Merchant acceptance always has been an issue, but Cunnington contends “the appropriate [merchants] that deal with these [small-ticket] transactions absolutely see the advantage” of contactless.
More than 20,000 payment terminals deployed by such UK merchants as Pret A Manger, Coffee Republic and Krispy Kreme accept contactless payment.
Barclays March 2 increased the transaction-size limit for its consumer contactless payment cards to 15 pounds (US$22.50 or 16.60 euros). The previous limit was 10 pounds. The limit for the commercial debit cards is 15 pounds.
Barclays and merchant acquirers agreed increasing the limit would entice more merchants to accept contactless payments, Cunnington says.
Consumers already were making 10-pound transactions with regular debit cards before the beginning of the contactless debit card rollout, Cunnington adds. Those purchases accounted for some 25% of all debit transactions. Barclays declined to disclose specific numbers and does not report them in its earnings statement.
Barclays’ contactless efforts suggest the technology is not “dead” by any stretch of the imagination, Bramlette says. “I really do believe contactless payments [by card and Near Field Communication-enabled mobile phones] will be a major payment form in the relatively near future,” she adds.
Cunnington agrees and encourages other issuers to follow Barclays’ lead. “All indications are that other issuers and merchant acquirers will soon move into this direction,” he says.
