U.K. reaches tipping point on contactless payments

The U.K. market has reached a tipping point where consumers are conducting more in-store transactions using a contactless form of payment (card or phone) instead of a process that requires the card to be inserted into a POS terminal, according to Worldpay.

The company stated that contactless payment usage has jumped by 30 percent in the past year to become the most popular form of in-store payment. The data is based on all card present transactions processed by Worldpay for the U.K. market between July 2017 and June 2018.

Worldpay predicts that in the last six months of 2018, U.K. consumers will conduct an additional £38.5 billion in contactless transactions while making in-store purchases.

An important part of the growth in contactless has been the rapid adoption of mobile wallets, such as Apple Pay, Google Pay and Samsung Pay, which have outpaced overall contactless growth. The mobile wallet usage has surged among high street retailers in the past year by 114 percent compared to the 30 percent for all contactless.

The contrast in overall contactless growth and mobile wallet growth can be seen in the breakdowns Worldpay provided for selected regions: Northern Ireland saw overall contactless transactions grow by 48 percent in the past year (July 2017 - June 2018) while mobile contactless payments rose by 166 percent. Scotland saw overall contactless surge by 37 percent, while mobile contactless rose by 122 percent over the same period.

The growing adoption of consumers choosing to tap and pay a card or phone at a terminal marks a seminal shift in the U.K. market. It also bodes well for mobile wallets, such as Apple Pay and Samsung Pay, which promote convenience as an alternative to traditional in-store card payments.

Worldpay's data is in line with data from Mastercard, which last month said that almost half of U.K. in-store card transactions are contactless. In the January to mid-September timeframe, Mastercard saw a 95 percent increase in contactless U.K. transactions.

Mastercard mandated in 2014 that all European POS terminals accepting Mastercard and Maestro products must be contactless enabled by 2020. This merchant accepting footprint expansion will act to increase contactless card and phone transactions since consumers will be able to use it universally throughout Europe.

While U.K. consumers and others from around the globe are choosing to go the contactless payment route while in stores, it is nothing more than an asterisk in the U.S. According to data from Visa on its global transactions, in September 2017 U.S. contactless transactions amounted to less than 1 percent of all Visa transactions in that month. In contrast, both the UK (49 percent) and Canada (47 percent) were already close to half of all Visa transactions being contactless.

A number of retailers, including Amazon, are spending millions of dollars to tackle the convenience and grocery store segments with just such solutions that focus on cashierless stores. Recently, the French grocer Casino launched a cashierless store in Paris.