Contactless debit card payments are now at their highest ever level among UK consumers, according to research by UK Finance.
According to the latest figures, 62% of all debit card payments are made using contactless.
While COVID-19 helped push contactless payments to record levels, as more shops stopped accepting cash and consumers were urged to use contactless whenever possible, this isn’t a new trend by any means.
Contactless took over cash as the most popular payment method in the UK in 2019.
The reason this is a trend that isn’t going to reverse or slow down, is because those customers who first started using contactless in 2020 say they aren’t likely to go back to using cash even as things get back to normal.
And younger shoppers have already moved on from contactless cards.
Many of them are now using contactless payments through eWallets on their smartphones or even smart watches.
What we’re seeing now is cash get pushed further and further down the list of preferred payment methods.
Yes, it is still used by some. The government has also started to investigate methods to protect the future of cash so it doesn’t disappear completely for those who still use it.
But on the whole, the future of payments is contactless. Here’s why.
COVID pushed consumers to contactless
Since the outbreak of the COVID-19 pandemic, consumers have been encouraged to use contactless payments.
Recommended by the government and the World Health Organisation, shoppers were urged to ditch cash and reduce Chip and PIN payments where possible.
To encourage them, the contactless limit of £30 was raised to £45 in April 2020.
The Financial Conduct Authority said the change had helped encourage more people to use contactless.
Since then, it has been announced that the limit could be raised again to £100. This is roughly the cost of a family’s weekly shop and would push contactless payments beyond being used for smaller “convenient” purchases or smaller shops.
Shoppers want less restrictions on contactless payment limits
If the limit on contactless was raised to £100, there would be little push back from customers.
In some research, roughly 40% of consumers said they want the limit increased to £100 so they can use it for larger purchases.
This just proves that contactless is being embraced by shoppers who have now discovered how convenient it is and want limits increased.
Customers value choice
More than a third of shoppers say they have found a new payment provider since the start of 2020, with more of them turning to providers who offer contactless options.
This is a clear sign that customers don’t want to be limited in how they pay for things.
It’s not just a payment thing. If you look at the rise of Ecommerce over the last 10 years you can see how convenience and choice is becoming not only more valued by customers – but expected.
Smart payment options and mobile wallets such as Apple Pay are becoming more popular each year.
41% of 18-26 years adopted mobile payment apps in 2019, according to a study by Statista. These figures are only going to continue increasing.
Consumers naturally spend more when using contactless cards
If ever there was a commercial reason for more businesses to choose contactless payments, it’s this.
According to a study by Mastercard, contactless payments on card machines have increased consumer spend by roughly 30% since they were introduced in 2007.
Part of the reason is that customers aren’t limited to the money they have in their pocket. They’re more likely to make impulse purchases as they walk around a shop or get to the till and see small offers.
All these small increases in individual transaction values can add up to a large increase in revenue for businesses over the course of a year.
Contactless is here to stay
What all these stats and changes to customer behaviour adds up to is a future for businesses where customers are expecting more options for how to pay.
And one in which they expect convenience.
Cash will always play a small part in everyday business for some businesses. But for the most part, contactless is the new king.
Businesses need to move now if they haven’t already to adapt how they take payments to meet the demands of their customers.
They only risk falling behind if they don’t.