NFC: Needs Further Clarity

Guest blog post by Bernhard Lachenmeier, head of products and marketing, SIX Payment Services

The Co-Operative Group recently became the latest retail chain to announce a roll-out of contactless payment terminals across the UK following the likes of Boots and Superdrug. This comes as Pret A Manger announces a 15 per cent rise in contactless payment transactions made in their stores over the past 12 months. Even Transport for London is riding the contactless wave, having introduced NFC bank card payment capability across the London bus network at the end of 2012. Organisations are undoubtedly starting to invest real sums into contactless payment technology, which would suggest that NFC is finally here. So why does it feel like this isn’t the case? 

According to the UK Cards Association, as of January 2013 there are 31.3 million contactless cards in the UK – suggesting that half of the population is walking around with an NFC-enabled card in their wallet. What’s more, according to ICM Research, the awareness level of contactless cards is 80 per cent, meaning most consumers are aware of the full capabilities of their payment cards. Yet the same research tells us that just one-third of contactless card holders have ever actually made such a payment. While I applaud the efforts and investment of the country’s retailers in providing contactless payment facilities – there are over 143,800 terminals in the UK – questions need to be asked around what will persuade consumers to make the jump from understanding contactless, to actually being comfortable using it.

Unsurprisingly, there are still a number of urban myths doing the rounds about the security of tap payments. Stories of electronic pickpockets who steal card details simply by walking past someone with an NFC-enabled card are enough to put many off the technology. Yet these are, as yet, unfounded rumours. We need a dedicated education campaign, focused on teaching consumers and retail staff – after all, cashiers are the people on the front-line of payment technology – the truth about contactless. 

The fact is that consumers are demanding increasing levels of convenience and speed in their day-to-day payments – and contactless offers this. What’s more, we live in a world in which we rely ever more on our plastic payment cards. According to the UK Cards Association, UK consumers spent £3.3 billion more using plastic in December 2012 than in December 2011. Using these cards in a contactless capacity is the natural next step, which is why card schemes, banks and merchants need to work together on an education programme.

Greater clarification is needed if contactless is to become a ubiquitous method of payment. Where NFC is concerned; it’s time to go back to school.