Contactless cards

January 12, 2012, 8:30 AM GMT+0

New research shows banks and retailers need to do more to up usage of contactless technology

Banks and retailers need to do more in order to increase usage of contactless card technology, which has low awareness among the British public, the latest research from YouGov’s Mobile Wallet study reveals today.

A study looking at NFC (Near field communication) and contactless technology, Mobile Wallet interviews over 2,500 respondents online, on a quarterly basis, with the next report due in March 2012.

  • The most recent research has found that just 12% of the British population believe they own a contactless card
  • Yet according to the UK Cards Association, there were 19.6 million active cards in the UK in November

Consumer awareness levels

Similarly, consumer awareness levels into retailers and banks providing the technology remain incredibly low.

  • Two-thirds of the population (67%) are unsure as to which bank offers contactless cards
  • Just 8% of the British population and 13% of contactless card owners recognise McDonalds as a 'wave and pay' provider – the most recognised outlet in our findings
  • As expected, awareness levels amongst contactless card owners are much higher, with most owners identifying at least one bank that offers the technology – Barclays/Barclaycard remains at the forefront of the competition with 66%

As well as the highest awareness levels, Barclays/Barclaycard also has a considerable share of the market.

  • 71% of contactless card owners own a Barclays card with contactless technology
  • The next highest competitor is MBNA (10%), followed by Lloyds TSB (5%)

Results indicate that educating consumers about contactless technology remains key in increasing awareness and adoption rates.

Russell Feldman, Associate Director in YouGov’s Technology and Telecom’s team commented, 'As expected, more and more retailers are hopping onboard the contactless bus with McDonalds and Starbucks being some of the bigger names. However, the vast majority of retailers do not offer the technology and could potentially be missing out on reducing queue times and gaining more foot fall – something retailers desperately need in the current climate.'

He continued, “It is up to the banks and other financial institutions to help educate the consumer in the technology, its benefits, and allaying any security fears. Retailers also need to make the public aware that they accept the technology and that paying with contactless cards can speed up the payment process.”

Real usage rates and habits

Surprisingly, actual usage rates amongst owners of contactless technology remain low.

  • 80% of contactless owners state that they have never used their card for a contactless transaction, with most owners making transactions using chip and pin
  • Only 5% of owners use their card for contactless transactions more than once a week
  • The main reason cited from owners of contactless technology who don’t use their card in a contactless transaction is the lack of retailers offering the service (27%)
  • Security is also a growing issue amongst consumers – an increase in 12% (May 2011) to 20% (November 2011)

Looking at contactless card owners who use their cards regularly in more detail, our research found that they typically use the technology to pay for small transactions in food and drink outlets.

  • The most popular venues being fast food restaurants (27%), coffee shops (26%) and sandwich and grocery shops (26%)
  • The majority of consumers are spending up to £10 on each transaction (74%)
  • Interestingly, consumers are spending a smaller amount (research wave on wave) – wave one (conducted in May 2011) saw 34% of consumers spending £10 to £15 compared to just 18% by wave three (conducted in November 2011)

Among those contactless card owners who do not use contactless as a method of payment, over half have expressed a desire to use the technology in future (59%).

  • The majority of these cited ease of payment/convenience (41%)
  • Along with speed (26%) as key advantages as to why they wish to adopt the technology

For more information on these findings and the Mobile Wallet study in general, please contact Russell Feldman, Associate Director, YouGov Technology & Telecoms Consulting. See the full press release and further information here.