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  • Thierry Spanjaard

Contactless has won the payment battle

For years, we have all been witnessing the inexorable growth of contactless payments, led by a few countries: the UK, Poland, the US, Czech Republic, Australia, etc. while other nations are lagging behind.

In the UK, Lloyds Bank data shows that consumers use contactless payments in nearly 90% of retail payment transactions. “According to the numbers from the UK bank, 65% of face-to-face payments were made using contactless debit cards in June 2019, in the early stages of the pandemic – but by June 2022, this had reached 87%,” they say. One of the triggers for the increase of contactless payment use is the change in the spending limit which has been going from GBP 10 (EUR 11.40) in 2007, fifteen years ago, to GBP 100 (EUR 114.00) now.

Data for Canada show the same trend as 81% of Canadians had used a tap-to-pay card in 2021, according to Mercator Advisory Group. The situation in the US is more contrasted as if 73% of Americans use chip payments, many of them use their cards in the “chip and signature” mode while contactless accounts to 45% of cardholders.

Interestingly, at the same time, research published in European Fraud Map produced by FICO shows that fraud level in the UK experienced a large decrease while the use of contactless cards was growing. According to this research, the UK has achieved the largest net reduction of the 18 countries covered in the report for the third year running, further reducing overall losses by GBP 49 million (EUR 55.90 million), a year-on-year decrease of 9%. FICO considers this sharp fraud reduction is coming from the early implementation of Strong Customer Authentication (SCA) controls on ecommerce transactions in advance of the 2022 implementation deadline, which has led to reducing the UK CNP (card not present) fraud losses.

Looking forward, a new study from Juniper Research has found that the value of contactless payment transactions will reach US$ 10 trillion (EUR 10 trillion) globally by 2027, from US$ 4.6 trillion (EUR 4.6 trillion) in 2022. This evolution is anticipated to be triggered by a combination of factors: investment in the underlying contactless payments ecosystem, such as contactless‑enabled POS (Point-of-Sale) terminals and device-level support, associated with an increasing installed base of contactless payment enabled smartphones. Juniper anticipates that mobile and wearable contactless payments will grow by 221% between 2022 and 2027.

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