The Brits tend to be a pretty staid bunch, but with the Olympics and the Queen’s diamond jubilee celebrations set for 2012, they’re gearing themselves up for quite a party – and contactless has been invited!
As a G10 nation, it has many of the characteristics of other economies in the grouping. It is the third largest economy in Europe after Germany and France with a GDP per capita of US$35,900 in 2011. The average age of its population is 40, and in 2010 it had 33.32 million land lines and 80.799 million cell phone subscriptions.
The retail banking sector is dominated by major national bank brands including Barclays, Lloyds TSB, RBS, NatWest, Santander, HSBC and Halifax. However, in 2010 almost a million adults still didn’t have a bank account. Just over 31 million – 64% of the adult population – used a credit or charge card. There were 165.3 million cards in issue: 55.6 million credit, 6.6 million charge, 84.3 million debit, 18.6 million ATM-only and 200,000 stand-alone check guarantee. The UK Cards Association has been supporting new cards technology by encouraging the rollout of contactless technology. It says 20 million cards had been upgraded by the end of 2011 and 73,000 retail outlets had installed contactless readers.
In fact 2011 was the year in which the UK made significant progress in initiating new contactless trials and evolving other pilots into full blown commercial schemes. With the 2012 Olympics now acting as a huge spur for deployments, this is a country to watch.
During 2011, a raft of statistics highlighted the growth in contactless deployments across the UK. For example, Barclays estimates that over the past year the number of its contactless terminals in the country has more than doubled, from 25,000 to 52,000.
Market research has shown an increasingly positive attitude towards contactless. Visa Europe’s 2011 Contactless Barometer survey of 2,000 UK consumers revealed that 90% thought the technology made life simpler and 85% would recommend it to their friends and family, with 58% saying they preferred to use it when they were short of time. But 28% said there weren’t enough retail outlets accepting contactless payments, while 57% revealed that they had never been asked to pay with it in a shop.
Surveys by a number of other firms does show though that there is still some way to go to fully convince the UK population of the merits of the technology. The Logic Group’s survey of UK 1,000 consumers revealed that 80% preferred to pay by cash for items costing less than £10 ($15.70) and only 3% would opt to use contactless. First Data spread its net wider and asked consumers in several countries whether they would use a contactless card. While 70% of those surveyed in the Middle East and 57% in Poland said they would, only 26% in UK/Ireland were prepared to use one.
During 2011 the newswires were awash with stories from some of the businesses at the vanguard of contactless deployment. With the Olympic Games offering a huge springboard for further rollouts of the technology, it was no surprise that sponsors Visa, Samsung and Lloyds TSB made significant announcements last year. Samsung and Visa said they planned to launch an NFC-enabled handset specially for the Games, to enable contactless mobile payments. Initially, they are being given to sponsored athletes only. Shortly after the Samsung/Visa tie-up was announced, Lloyds TSB confirmed that it plans to be part of the commercial NFC launch, which will have a prepaid application.
Other firms using the 2012 Olympics as a deadline for rollouts include Research in Motion (RIM) and Google. BlackBerry smartphone manufacturer RIM announced plans to launch NFC payments in the UK in time for the Games. Google also confirmed it will roll out its Google Wallet contactless mobile payments service in the UK by the summer.
Other firms decided not to wait till the Olympics to launch their services. Orange UK and Barclaycard went live with Quick Tap, the UK’s first contactless mobile payment service. Based on NFC, the service is available on the 2G Samsung S5230 handset (marketed as ToccoLite in the UK), supports MasterCard PayPass and is stored on SIM cards issued by Orange.
Orange also released its contactless prepaid MasterCard ‘Orange Cash’ bank card, which can be loaded with up to £5,000 ($7,852) of credit for contactless purchases.
MBNA got in on the act by confirming that it is phasing in contactless cards for its 6 million customers. It also announced it would begin issuing the UK’s first American Express-branded contactless credit cards, making it the world’s first issuer of EMV-enabled contactless credit cards for all three major payment networks – American Express, MasterCard and Visa.
The Post Office announced plans to introduce contactless payment technology at its 12,000 outlets. The upgrade should be completed by October 2012 with around 30,000 to 35,000 contactless terminals in place.
PayPoint became the first national cash payment network in the UK to introduce contactless. It began distributing contactless PIN pads using the PayPoint/Lloyd’s TSB Cardnet service to 1,000 of its retailers across the country.
Many of the big banks made significant announcements last year. Lloyds TSB launched Visa contactless debit cards to its customers living within the M25 motorway area. Barclaycard continued its love affair with contactless when its Global Commercial Payments unit launched the UK’s first contactless corporate payment card. This makes it easier for businesses to track smaller transactions which are traditionally made with cash.
Recognizing the opportunity for co-opetition is an important feature of contactless and NFC deployments. The UK’s three biggest cell phone network operators, Everything Everywhere, Telefónica (O2) UK and Vodafone UK announced plans for a joint venture to enable service providers to put credit, debit, loyalty and membership cards, along with transit tickets, couponing and advertising offers, onto NFC phones operators sell to their subscribers.
The UK’s retail sector has continued to back contactless over the past year. Discount retail chain Wilkinson’s became the first in its sector to trial contactless payments, rolling out the technology in 25 of its stores. If it goes live across the chain it will open up contactless to the 4 million-plus customers the retailer serves every week.
Cobbler to keycutting specialist Timpson installed Barclaycard contactless POS equipment in its 860 outlets, and photo lab Max Spielmann is also rolling out the card provider’s contactless sales devices.
The UK’s supermarkets have also got down to contactless business over the past year. Its largest chain, Tesco, launched an RBS-backed pilot at several of its stores. The Co-operative also announced plans to roll out contactless payments to 3,000 of its stores.
Food and drink
Fast food outlets in the UK made further inroads with contactless during the year. McDonald’s announced that all its 1,200 UK restaurants would accept contactless payment for meals under £15. And Starbucks inked a deal with Barclaycard and Visa Europe to pilot contactless payments in a number of its UK coffee shops. If successful, the technology will be rolled out to more of its outlets.
Drivers can now take advantage of contactless in the UK. Fuel giant BP is installing MasterCard PayPass terminals in its service stations to enable consumers to pay for fuel and other purchases. This will be a significant development if the firm rolls it out to all 1,170 of its outlets. Although the UK doesn’t have the same extensive network of toll roads as some of its continental counterparts, it is starting to add contactless to toll booths. The M6 toll road trialed contactless in a single lane with the aim of fully implementing the technology this year.
The mass transit sector, which saw some of the earliest deployments of contactless, has also continued to make progress. Early last year Transport for London (TfL) announced it would upgrade the Oyster prepaid transit card system network to an open loop network capable of accepting contactless credit and debit card payments on buses and the subway. The move – supported by MasterCard and Visa – is seen as a major step forward, enabling visitors to London to use their contactless cards to access the transport network. Oyster card holders already tap their cards more than 13 million times a day.
MasterCard also confirmed a multi-million-pound partnership with TfL to raise awareness of PayPass on transport systems. It agreed exclusive branding of the Oyster wallet – which is distributed with all newly issued cards – for 2011.
Almex, part of Hoeft & Wessel announced it is equipping FirstGroup, the UK’s largest private bus operator, with 4,000 contactless systems with a further 1,500 planned for a later date. Its UK Bus division carries approximately 2.5 million customers a day in more than 40 major towns and cities. The company says it intends to be the first bus operator outside of London to accept contactless credit and debit card payments, which will be introduced across England in late 2012.
Plymouth Citybus passengers can now purchase advance tickets on the operator’s web site which are activated on their ‘Key’ contactless travel cards.
Leisure and entertainment
The leisure and entertainment industries also continued to embrace contactless last year. MasterCard and Central Catering Services deployed PayPass-enabled contactless wristbands at the Isle of Wight Festival, enabling music fans in the VIP area to make contactless purchases at Central Catering’s bar and Jamie Oliver’s Fabulous Feast restaurant.
NFC-based tag reading featured prominently in this sector during the year. Smart posters were deployed in central London enabling NFC handset holders to tap them to find out more information about products and films showing locally.
The Museum of London and the Museum of London Docklands were involved in a Nokia-backed project that enabled users to tap their NFC handsets on around 90 tags dotted around the two museums to transmit web links to their phones. Users could then visit these web pages to find out more information about exhibits, buy tickets for future events, or follow the museums on social networking sites.