Latest data from the Smart Payment Association has confirmed that more than 40% of the 2 billion chip payment cards shipped last year had contactless payment capabilities. Meanwhile, the coming obligations EMV obligations for the US saw 185 million card and module shipments to that country in readiness for the transition to CHIP & Pin, representing a sixfold increase on the previous year.
Indeed, it is arguable that one reason behind the timing of the Apple Pay launch was to gain traction in the US at the precise point that retailers were enabling contactless payment at the point of sale, so that if Apple users are making such a payment, then they would use their smartphones rather than their credit or debit cards.
UK Market Experiencing Contactless Growth
The situation in other developed markets is markedly different. Here. CHIP & PIN has been in place for several years, while contactless card payments – although slow to begin with – are now seeing significant traction in several key markets.
In the UK, where according to the UK Cards Association there were nearly 37 million contactless cards in circulation by the end of last year, contactless transactions rose from 11.2 million to 40.5 million, fuelled in part by the continuing rise in supporting infrastructure (there are now over 215,000 contactless terminals across the country).
While these transactions are still a drop in the ocean within the wider retail space – there were nearly 12 billion purchases made on credit and debit cards in the UK throughout the year – individual terminals are now seeing a marked uplift in transaction levels. The same is true elsewhere in Europe, notably markets such as Poland and France.
European markets ‘primed’ for Apple Pay
Hence, when Apple Pay launches in these territories– a UK launch is expected later this year – it will not be seeding the market for contactless as it has been obliged to do in the US (true, there was also ISIS/Softcard, but it is perhaps better to draw a veil over those proceedings). In Europe, it will launch into marketplaces which are already primed and with a growing affinity (and supporting infrastructure) for contactless payment. Whether we will see existing contactless card users migrate their spend over to their iPhones remains to be seen.