The U.K. Cards Association keeps impeccable data on payments – volume, usage, transactions, spending volumes – you name it, they track it with precision and have for years. Their 2015 report (which reports 2014 data) says that the total value of transactions using contactless at the point of sale – cards and mobile phones – increased 331% from the year prior.
That’s, of course, the headline that got reported. Everywhere.
And, it is true that contactless volume is growing in the U.K. But it’s sort of like the fact that my Scottish Terrier grew 300 percent in his first 2 months of life. The little guy was still, well, pretty little despite his growth spurt – and still is years later.
In 2014, total card transactions in the U.K., they report, totaled £600B on some 13B transactions.
Contactless volume – cards and mobile phones – was £2.3B of that £600B and 319M of those 13B transactions.
I’ll do the math for you. That’s .4 percent of card volume and 2.5 percent of transactions.
What’s fueled that “massive” increase in volume?
It wasn’t smartphone-toting fashionistas shopping at Harrods.
The average transaction value on those contactless purchases was £6.37 – which is a little less than $10. That’s lunch at Eat, a favorite London lunch spot. The real thanks goes to the London Transport, which in December 2014 alone, drove 11 percent of the contactless volume. And that volume wasn’t the result of using mobile phones, either. Although more than 60 percent of U.K. adults have smartphones, according to Deloitte, the percentage of those with “NFC-enabled SIM cards and phones” is very low. Monthly mobile phone usage at any point of sale is reported to be less than 0.5 percent of the 450 million-500 million NFC-phone owners as of mid-2014, the last time data was available.
Then, there’s Korea.
South Korea has been heralded as one of the world’s most advanced mobile payments’ meccas since about 2010. Google “mobile phone payments in Korea” and you’ll find article after article after article extolling the virtues of South Korean consumers using contactless mobile payments at the retail point of sale there.
Except that’s not the way it really is.
The reality is that mobile payments at the retail point of sale are sputtering in South Korea. According to the GSMA, only 6 percent of terminals there are enabled for contactless payments –mobile or otherwise. Back in 2010 when the mobile payments hoopla started, there was a big arm wrestle over standards that slowed things down. It took Korea Telecom almost two years to get 100k users on board with a QR code based scheme at a handful of merchants. Volume was miniscule and if mobile phones were used in stores, it was to access them for coupons, not make payments, which are still dominated by the use of plastic cards.
Things are starting to turn the corner a little, but only recently.
Last summer, Samsung Pay reported that they had acquired 500k users in the space of a month and racking up millions in transaction volume. Leveraging both existing card accounts and merchant terminals created a ubiquitous payments environment that has expanded the possibilities for merchants, banks and consumers and perhaps broken the mobile payments at the retail point of sale logjam.