Contactless payments accelerate in developed countries
Two new reports show that the displacement of cash is growing strongly in major economies, but progress is only sluggish in emerging markets.
Two new reports show that the displacement of cash is growing strongly in major economies, but progress is only sluggish in emerging markets.
The popularity of mobile payment apps is growing strongly on both sides of the Atlantic, while emerging markets remain heavily reliant on cheque and cash payments, according to Citigroup and London’s Imperial College.
The growing gap is revealed in the latest digital money index compiled by the two entities, which extend the term ‘digital’ to all forms of contactless payment.
According to the index for 2015, Finland was again ranked as the most digital-ready country for the third consecutive year, with Singapore and the US retaining second and third position respectively. The UK rose to fourth, from seventh in 2014.
However, progress worldwide towards an all-digital payments future was slow last year and the report forecast that the journey would be a lengthy one.
“What we found this year is actually pretty stark,” Sandeep Dave, Citi’s global digital strategy head, told the Financial Times. “The incipient countries that have a long way to go, they almost showed a zero improvement against 2014 scores, (while) the materially ready countries showed the most improvement.”
He added that the research suggested that customers’ conservative attitudes were largely the cause of slow progress, rather than inadequacies in market supports, technology or digital money products.
“We looked at six countries where we saw an improvement in digital money solutions - but countries only saw a change in rank where they were able to materially impact consumer ‘propensity to adopt’,” added Dave. “Culture as a barrier came to the front.”
Citi and Imperial College are holding their fourth annual symposium on digital money this week in London’s Canary Wharf financial district.
A separate report by Visa Europe found that purchases in the UK by Visa debit or credit card increased by 250% last year. One in seven payment transactions in 2015 came from cards being waved over a payment terminal, against one in 25 a year earlier.
“In the UK, contactless has become the ‘new normal’,” said Kevin Jenkins, Visa Europe’s managing director (MD) for the UK and Ireland. “At this rate, cash will be seen as a peculiar way of paying for things in as little as five years’ time.
“Mobile payments will accelerate this change and we’ve invested in the infrastructure for it to take off. Almost 460,000 terminals across all of the UK are now ready for face-to-face contactless and mobile payments.
Bus and Tube train operator Transport for London is Visa’s biggest contactless merchant in the UK, with one million transactions occurring daily on the city’s transport network.