It’s not often local retailers can be deemed to have missed a trick, but I find it interesting that so few have contactless payment systems. Around a third of retailers have adopted the technology, so perhaps I’m being a bit harsh given it only launched in the UK in 2008. Even so, that’s a fairly slow adoption rate and based on current projections around 4,000 stores in Scotland alone have yet to invest in a system, which adds up to a whole lot of PINs being unnecessarily entered.
These days pretty much every customer who carries a bank card with them has the ability to pay without going through the rigmarole of inserting their card into a slot when advised it’s safe to do so, waiting for the wee message that says they can enter their PIN, entering their PIN and waiting to be told they can remove their card.
I’m getting bored just writing about it. Convenience stores were given the name for a reason and there’s nothing more convenient than reducing the steps and time of a transaction.
On a personal level I’ve started carrying less cash over the last year as more shops begin to offer contactless payment. In the modern world (perhaps sadly) time is everything and that means if I can pay for something by flashing my card – or more recently, my phone – rather than hand over a note and wait for change then I’m going to do it. What’s more if I’ve got a choice of two shops and one of them has contactless payment, that’s the one I’m going to frequent.
Which brings me to my point. Today’s local retailers are competing in a retail environment where such seemingly insignificant service extras can make all the difference, so why have 4,000 Scottish stores not yet adopted such a system?
In June this year, 81.2 million contactless transactions were made in the UK, an increase of 9.6% on the previous month and a phenomenal 240.9% over the same period in 2014. And while there is a small premium in processing card transactions over a cash transaction, it’s worth noting that 87% of contactless transactions are made with a debit card, so the cost really is minimal.
When researching the adoption of contactless payment one number stuck out more than any other: the average contactless transaction is £6.98. The average basket spend in a convenience store is £6.45. Which leads me to propose that convenience stores and contactless payments represent the most perfect marriage since someone decided to combine malted barley and yeast with water.
That’s before we even get into the reduction in transaction times, the reduction in cash handling (and all the myriad benefits this entails) and the transaction data that can be utilised to build individual customer profiles.
And I’ve not even started on mobile payment systems like Apple Pay and Android Pay. The bottom line is that these are services the modern consumer expects. The staggering growth rate in contactless payment will only accelerate with the introduction of mobile payment solutions, and local retailers who don’t adopt it could soon see it hitting profits as shoppers turn elsewhere.
Kevin Scott, Editor
