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Contactless limits

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So the “contactless limit” (i.e., the maximum amount that a contactless no-PIN transaction can be for) went up to £30 today. This is a reflection of the popularity of contactless in the UK. The latest month for which figures are available (June 2015) shows continued strong growth in such transactions.

  • 81.2m contactless transactions were made this month. This is an increase of 9.6% on the previous month and 240.9% over the year. The volume is split between debit (£70.7m) and credit / charge cards (£10.5m).
  • 259,074 bank-owned terminals are available in the UK where contactless cardholders can make a contactless transaction. This is an increase of 5.6% on the previous month and 35.9% over the year.
  • On average, each contactless transaction is for £6.98. This is split £7.02 on a debit card and £6.73 on a credit / charge card.

[From Contactless statistics]

More was spent on contactless in the first half of this year than the whole of 2014 and that comes after a 300%+ growth in contactless numbers through 2014 itself. The growth is strongest in food and quick-service retail (QSR) as you would expect.

Other sectors leading to the growth in contactless includes supermarkets and food retailers, which accounts for 46% of all contactless transactions, the hospitality sector is close behind with 38% taking place in bars, coffee shops and takeaways. However, the rest of the retail sector has a long way to go, however, accounting for just 13% of contactless transactions across the UK.

[From Contactless payment transactions pass the magical 1bn mark – Retail Gazette]

One of the reasons for the rise to £30 is that use in supermarkets, where the average basket size is (as I understand it) over the existing £20 limit. Just for comparison, in Australia where the contactless limit is $100 (about £50), more than two-thirds of all supermarket transactions are now contactless, so we still have plenty of room for growth.

Note also that London alone accounts for more than a third of all contactless transactions in the UK and this is largely because of TfL’s decision to accept contactless credit and debit cards at the gate. That’s also had a knock-on effect for wider usage. I think the dynamic was that lots of people has contactless cards that they hadn’t used but once they’d used them to get on the bus then they began to use them for cups of coffee and then sandwiches and then the supermarket and such like.

According to Barclaycard data, 30% of card payments in London in 2014 were contactless,

[From Contactless payments taking off in the UK in 2015 | Mobile Transaction]

I use my contactless card (well, the contactless sticker on the back of my phone actually) all the time and so I’m very happy to see the limit rise as I find it super convenient to pay in Marks & Spencer with the phone that is already in my hand.

Stickers are the future

It’s fascinating to me that over the last decade that it has taken contactless to get to the mainstream (the first contactless product that Consult Hyperion worked on was in the US more than ten years ago) the relationship between contactless and mobile has always been strong but convoluted. I think we’re now seeing it stabilise though and the path from tap-and-pay to app-and-pay is becoming clearer. With Apple Pay strengthening, Android Pay and Samsung Pay launching and the boom in in-app solutions, the limit to contactless growth is no longer inherent conservatism, press scare stories or the continued use of chip and PIN but its replacement by mobile solutions (for whom the £30 limit doesn’t apply anyway).

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