McDonald’s UK, Irish Issuers Add Their Support For Contactless Payment

Several issuers in the United Kingdom and Ireland recently announced plans to issue contactless cards usable at several major merchants. And while one observer says few consumers see the benefit of contactless payment, more European merchants, especially quick-service restaurants, have begun to accept contactless cards.

McDonald’s Corp. last week announced plans to enable consumers in the UK to use the Visa PayWave or MasterCard PayPass contactless function on their debit and credit cards to pay for purchases less than £15 (US$24 or 17 euros).

The restaurant chain plans to roll out the contactless-payment option at its 1,200 UK locations by this summer, McDonalds said in a Jan. 18 news release. The restaurant did not specify which brand of payment terminals it will deploy to support the payments.

As do other merchants accepting contactless payments, McDonalds is touting the function’s “lightening speed” and believes it will enable consumers to save time and avoid having to carry cash to pay for smaller purchases.

More and more European issuers also believe a contactless option will help reduce the need to carry cash and have announced plans to launch or convert contactless cards within the next two years. MBNA Europe Bank Ltd. in October announced a two-year initiative to issue 5 million contactless credit cards in the UK (see story).  And several Ireland-based banks, including Bank of Ireland Group, Permanent TSB and Ulster Bank Ireland Ltd., recently partnered with Visa Europe to add a contactless function to their debit cards by this summer.

Bank of Ireland first will convert its Laser debit card to Visa, while both Ulster Bank and Permanent TSB issue Visa-branded debit cards already.

The laser card scheme is a partnership between Bank of Ireland, Allied Irish Bank Plc, EBS Building Society and National Irish Bank. Bank of Ireland is ceasing its involvement in the partnership this year.

Consumers may use the contactless function on their EMV chip-and-PIN cards for items costing up to 15 euros (US$20 or £13) or when the total transaction is less than 45 euros. They will have to use their PIN for larger purchases, according to Visa Europe.

Despite the rise in acceptance and issuance of contactless cards in Europe, consumers generally are not using the function because they do not receive enough incentive to do so, contends Megan Bramlette, director of New York-based Auriemma Consulting Group. Consumers do not see contactless cards as a way to save time because they still have to wait in line, and they do not receive incentives such as discounts when using the payment option, she says.

Moreover, swiping or inserting a card takes virtually the same amount of time as tapping one on a terminal, especially from a consumer perspective, Bramlette says. And using a contactless card at the point of sale may even be slower when cashiers are not properly trained, recent Auriemma research suggests.

In some cases, the cashier may get flustered when consumers say they want to pay using contactless, and that can slow down the process, Bramlette explains. Additionally, the cashier may need to call a manger over to enable the contactless reader to accept the payment, causing further delay, she adds.

The best option for merchants to drive contactless card use may be to offer benefits, such as discounts or a dedicated checkout line for contactless payments, Bramlette says.

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