New analysis casts doubt over the viability and uptake of wireless, contactless payments, but the payments industry begs to differ

Much hyped contactless payments may be a long way off from becoming the norm in the UK despite trials by retailers such as Boots ahead of a potential roll out at their till points nationwide, finds Datamonitor. 

The research from the independent market analyst has revealed that, despite the huge potential market open to contactless payments, the economic downturn has delayed issuers other than Barclaycard from investing in the technology, as they just haven’t been able to spend money on it. Meanwhile many retailers are not sure yet if contactless is worth the investment.

Gilles Ubaghs, financial analyst at Datamonitor, stated: “Retailers could likely find the cash if they were convinced it was worthwhile, but many don’t seem sure there is any real point. Essentially it is a ‘catch 22,’ as many consumers aren’t interested in having a contactless payment card when there are still so few places to use it and retailers don’t want to install the technology as so few people have a card.”

Slow adoption curve predicted

However, the Datamonitor research did find that there are promising long-term signs that the technology could take off, but it won’t be as soon as many analysts predict.

Ubaghs continued: “Although contactless payments have been around for nearly 10 years, Barclaycard and London’s Oyster travelcard remain the only two high-profile companies to offer contactless cards. Investment by other issuers is needed, not only in the technology itself but in educating consumers as well. Consumers will need to be convinced that it is worth their while to use the new technology.

“Importantly, for consumers to be sold on using contactless payments retailers and issuers will need to work together and as this is yet to happen on a large scale,” he added. “It will be a good deal of time before we’re able to walk into any shop and buy a chocolate bar in the same way as London commuters tap their Oyster cards.” 

In the card issuers’ interests

Stuart Neal, head of UK payment acceptance at Barclaycard, responded to the research: “Far from delaying the uptake of contactless, the recession has provided an added impetus for retailers to be innovative and offer improved customer service,” he countered.

“Forward thinking retailers that we’re talking with recognise the value of contactless payments – not only does it cut valuable seconds off the length of time it takes to make a transaction, leading to increased sales and a higher footfall, it also increases the average spend per customer.

“We’re looking to actively encourage adoption, so for many retailers the cost of implementing contactless is modest. Currently there are 25,000 Barclaycard contactless terminals live and accepting payment across the country and we remain committed to working with retailers and consumers to roll it out across the UK.”