Nearly 1 in 2 payment transactions in Europe are now contactless
Europe is moving increasingly towards a 'cashless economy'
Contactless payments have become so prevalent in Europe that almost one in two transactions use the payment method over other traditional card payment techniques.
Such a surge in contactless use has been helped by the adoption of the payment method by transportation systems across Europe, according to MasterCard.
With the likes of the London Underground adopting contactless payments through credit and debit cards, as well as supporting the likes of Google Pay and Apple Pay, making payments by simply hovering a card close to a terminal or, somewhat ironically, tapping it on a card reader is becoming the standard method of payment within transit systems.
MasterCard noted that come 2020, all payment terminals in Europe will have contactless support.
Europe is being cited as a forerunner in the adoption of contactless technology, with the continent looking to be a leader when it comes to embracing the idea of a "cashless economy" whereby the idea of carrying loose change and paper notes becomes increasingly archaic.
"Europe is leading the way in contactless payments and what is consistent across the board, despite the economy and development status of each country, is the consumers' adoption behaviour to embrace contactless technology. We're increasingly seeing various European markets demonstrating swift adoptions of the technology as consumers increase their trust in the technology," highlighted Javier Perez, president at Mastercard Europe.
18/06/18: Debit card payments overtake cash for the first time
Debit card transactions overtook cash as the most frequently used payment method for the first time towards the end of last year, according to figures released yesterday.
An increase in debit card payments last year of 14% was mirrored by a fall in cash payments by 15%, taking the number of recorded transactions for the two methods to 13.2 billion and 13.1 billion respectively in 2017.
UK Finance, the body that represents the UK's financial services industry, said the earlier-than-expected crossover was partly fuelled by a rise in contactless payments - up 97% year-on-year in 2017 - with 5.6 billion credit and debit payments made via contactless.
The rise in alternative payment methods speaks to the waning power of cash across the UK, with nearly two-thirds of adults now using contactless payments - and 77% of those aged 25 to 34 making contactless payments last year. Moreover, 3.4 million consumers almost never used cash at all.
"The number of cash payments in the UK is expected to continue to fall over the next decade, as consumers continue to turn to alternative payment methods, most notably debit cards," UK Finance's Payment Markets Review, released today, said. The organisation also offered its projections for what the future of payments in the next 10 years will look like.
Cash payments in 2027 will only comprise 16% of all transactions, the report suggested, but will still be the second most popular payment method in the UK.
"Rather than the UK becoming a cash-free society over the next decade," the report continued, "it is transforming to an economy where cash is less important than it once was, but remains a payment method that continues to be valued and preferred by many."
The rise of cashless payments has coincided with the growing popularity of online banking, with 71% of adults using internet banking in 2017 and 41% of consumers using mobile banking. This, in turn, has led to a rise in the number of payments processed via the decade-old Faster Payments Service.
The Faster Payments Service, a UK banking initiative that has seen a reduction in the transfer time between bank accounts from the three working days to a few seconds, saw 1.6 billion payments in 2017, and is expected to process 2.4 billion payments by 2027 with the continued growth of online and mobile banking.
"The choice of payment options available in the UK is allowing people to choose to pay the way that best suits them," said UK Finance's chief executive, Steven Jones.
"But we're far from becoming a cash-free society, and despite the UK transforming to an economy where cash is less important than it once was, it will remain a payment method that continues to be valued and preferred by many."
He added: "These trends are likely to shift further over the next decade. Developments such as open banking are expected to bring extensive changes to the payments landscape, something that will likely shape how we interact with our money in the coming years."
The report also noted that contacless payments will jump from 15% of all payments in 2017 to 36% of all payments by 2027.
The significance of such payments services as iZettle, routinely deployed by businesses across the UK, was demonstrated last month when PayPal acquired its Swedish rival for $2.2 billion.
Forecast growth of debit card payments, meanwhile, which UK Finance predicts will rise by 49% to 19.7 billion payments in 2027 - the fastest growing payment method - will also be driven by the ongoing growth of online shopping, and the ever-increasing levels of card acceptance by all businesses, but particularly among smaller businesses.
"Card use will continue to rise for now - but will face stiffer competition in the future from open banking innovations that enable people to pay for items with a transfer directly from their bank account," said Jake Morgan, senior analyst with Forrester.
"Offering payments directly from a bank account is generally cheaper as it avoids card fees.
"Broader changes in shopping habits, such as order ahead and remote purchasing, contactless and mobile payments, as well as experiments with voice-based payments using Siri or Alexa, mean that payments are now embedded in many devices.
"Card use will continue to grow for now, however open banking driven innovation that bypasses cards will only increase competition at the checkout."
The case for a marketing content hub
Transform your digital marketing to deliver customer expectationsDownload now
Fast, flexible and compliant e-signatures for global businesses
Be at the forefront of digital transformation with electronic signaturesDownload now
Why CEOS should care about the move to SAP S/4HANA
And how they can accelerate business valueDownload now
IT faces new security challenges in the wake of COVID-19
Beat the crisis by learning how to secure your networkDownload now