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More than a million contactless payments have been made in UK this year as NFC grows by stealth

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Contactless payments may seem a long way off becoming a retail reality, but almost by stealth they are starting to take off. UK card processing company Commidea has already seen a staggering 1 million contactless payment transactions with a total value of more than £4 million being processed using its solutions so far this year – which is about 80% of the total.

More consumers are ‘tapping’ their contactless cards at convenience retail and food outlets to pay for transactions under £15 generating some £5million a year. The transactions take less than half a second and eliminate the need for handling cash, therefore reducing queue times and helping to increase sales.

In addition to the emerging trend of contactless payments, customer transaction volumes across Commidea’s systems as a whole have increased by 60% from this time last year. An average of approximately eight million transactions are carried out each week using Commidea’s card payment processing systems online and at customer locations including Blockbuster, EAT, TGI FRiDAYS, Lush and Thomas Cook.

Nokia already has phones on the market that are capable of handling cashless payment and Spar has installed contactless payment terminals in five central London stores and plans to roll them out in 19 stores in Liverpool by the end of January 2011. A full roll out is expected to be concluded by the end of September 2011. On top of this, the Co-Operative Group will also start introducing 100 terminals from March 2011 as part of a nationwide rollout later in the year.

Indeed, both Barclays and the Co-Operative Bank have already started to roll out contactless cards, and an estimated 12 million cards expected to be on the market by 2011. Although contactless payment is initially likely to be card-based, much like the Oyster system that currently runs in London, it is a short leap over to the mobile phone.

Still the big four retailers have remained circumspect about introducing contactless payment, with just Tesco and Asda even trialling the concept. It is very likely that any “contactless revolution” is likely to be led by the convenience market.

This is for a number of reasons: firstly, the average basket is lower valued and more time conscious; and secondly, because for smaller retailers this is just about bolting on a new technology, whereas for the bigger chains it can mean a full overhaul of their IT systems. And this can be something that is prohibitively expensive.

Having said that, if a brand like Tesco sees the benefit to its customers it will certainly invest in it.
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