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“PEOPLE ARE REALLY QUESTIONING, ESPECIALLY AT THE POINT OF SALE, WHAT THE REAL VALUE-ADD OF MOBILE PAYMENTS IS”
network was the major tipping point, as it encouraged the mass population to try the technology and realise its convenience advantages,” says Burrows. The increase of the transaction limit from £20 to £30 “has helped more than you’d expect, as this brings the maximum to an amount widely used, for example for splitting restaurant bills.”
Such measures are certainly having an impact on adoption statistics. According to the UK Cards Association, as of March 2016, there were a total of 86.5 million contactless cards in issue in the UK. This marked an increase of 2.7% on the previous month, and 35.6% over the year. The increase in the average spend was even more startling: £1.5 billion was spent in the UK in March on a contactless card, an increase of 250% on the same month in 2015.
Adoption has been given a boost by the much-publicised launch of Apple Pay in the UK last summer. Even if the system, which operates much like contactless except it’s the phone that’s tapped on the terminal rather than a card, has received mixed reviews from consumers and analysts. While some preferred the extra layer of security offered by Apple Pay (users’ thumbprints are used to validate transactions) others complained that it was slower than touching a card. “Have you tried using it on London Underground or in a coffee shop with a queue of people behind you tutting at how long it takes?” asks Burrows.
Teething problems
Tom Blomfield, CEO at Mondo, a digital challenger bank, believes the jury is still out on the use case for Apple Pay, and its Android equivalent. “People are really questioning, especially at the point of sale, what the real value-add of mobile payments is. Is that much more convenient than tapping a piece of plastic which you have to carry around
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anyway? If you have to carry that piece of plastic around anyway, then does tapping your phone instead deliver any key consumer benefit?” he asks.
Burrows is similarly sceptical. “Apple Pay created a lot of hype, despite being less convenient than a contactless card in many situations; there’s the need to set it out, need to fingerprint authenticate for the transaction and [there’s a] lower acceptance rate than contactless in general,” he says.
Android Pay faces many of the same teething problems, he warns. “It has now launched in the UK, but with some similar limitations to Apple Pay, reducing their advantages over a traditional contactless card.”
Blomfield does concede it has one or two advantages, however. “The big benefit of Apple Pay, which isn’t talked about much, is in-app payments. I use JustEat a lot and I used to have to enter my CCV code every time and even enter the card number when it’s a total faff to use a small keyboard to tap out 16 digits.” Now he just has to use a thumb print, eradicating the need for all that additional admin. “I suspect in-app payments is the hidden success story of Apple Pay.”
However, Nationwide’s Horlock is more positive about the impact of the Android Pay launch in particular. “It is a big milestone because a large proportion of the nation uses a smartphone. 40% of people in the world own a smartphone and it’s much higher in countries like the UK. Although customer [research] says the majority of people are on iOS, that ability to use Android will push [contactless adoption] further along,” he says. “Judging by Twitter there are many happy Android users out there who have been desperately waiting for Android Pay to happen.”
Developments such as the launch of Apple Pay and
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