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Wearables join mobiles as high-growth payment methods

Banks must develop broad contactless payment strategies if they are to keep pace with consumer demand

Barclaycard reports that the use of its wearable payments technology and its Android mobile phone-based contactless payment services are accounting for a larger proportion of its customers’ spending.

According to Barclaycard’s Contactless Spending Index, the value of mobile phone-based touch-and-go payments using its bPay payments chip, which is embedded in items such as watches and jewellery, increased by 365% in 2017 compared with 2016. Over the same period, mobile phone-based contactless payments using its Android app saw a 129% increase in the value transacted.

Overall, including the more established cards, contactless payments saw a 79% increase in the value transacted over the same period.

Other findings showed that Belfast, York and Newcastle were the cities with the biggest increase in contactless use last year. London, where Barclaycard has offered contactless payments for more than a decade, dominates in terms of usage, but other towns and cities show growing use of the technology.

Barclaycard found that paying for rail tickets and car parks using contactless payments showed the fastest growth, up 235% and 132%, respectively, and said convenience is partly behind these rises. “Travel is an area where speed and convenience are key for consumers,” said Barclaycard’s report. “Time is of the essence when rushing to board a train, with ‘touch and go’ saving an average of seven seconds per transaction compared to chip and PIN and 15 when compared to cash.”

A recent survey of 50,747 people across nine European countries by Mastercard found that more than a quarter of UK shoppers are ready to make contactless payments using wearable devices.

Read more about wearable devices

“Shoppers’ trust in contactless is greater than ever, and in turn it seems they are ready to take this one stage further by trying contactless through connected devices,” said Paulo Battiston, executive vice-president of digital payments and labs Europe at Mastercard. “Pilots like the one we’re involved with in the Netherlands will empower consumers in the digital economy.”

Banks need to respond to the demand for contactless from consumers or risk losing revenue streams to fintech challengers. For example, in the Netherlands, where half of retail purchases are made using contactless technology, Dutch bank ABN AMRO launched a pilot in which 500 of its customers can approve transactions with wearable devices.

Read more on Mobile software

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