Contactless card spending in the UK ballooned 223% in 2016 to total £25 billion ($33.74 billion), according to The UK Cards Association. Greater availability of contactless payment options at grocery stores and an increase in the spending limit for individual contactless transactions likely helped boost buying via the method.
According to Gartner’s definition, contactless payment technology enables payment transactions via a contactless chip embedded in payment cards, tags, key fobs and mobile phones. The chip communicates with a reader device that uses radio frequency or near field communication (NFC) standards. It includes radio frequency identification (RFID) as part of a machine-to-machine communications trend.
All told, 2.9 billion contactless transactions were made by UK consumers in 2016—nearly 20% of the 14.8 billion total transactions made via debit, credit or charge cards in the country last year. In January 2016, contactless transactions accounted for one in seven card payments, but that proportion rose to 25% in the month of November.“Contactless cards are increasingly becoming the payment method of choice for everyday, low-value purchases,” said Graham Peacop, CEO of The UK Cards Association, in a statement.
According to Barclaycard’s Contactless Spending Index, spending via contactless card payments increased 166% in 2016. Retail sectors seeing notable gains included service stations (218%), department stores (147%), supermarkets (136%), discount stores (120%), hotels and motels (100%) and convenience stores (87%).
Barclaycard, which introduced contactless payments to the UK in 2007, singled out supermarkets for meeting a new milestone: More than half (55%) of eligible electronic transactions (those worth £30 or less) at UK grocery stores were made using a contactless card option during the 12 months ending in January 2017.
That achievement coincided with the deployment late last year of a contactless card payment option at Sainsbury’s, the last of the UK’s major supermarket chains to do so. It also occurred in the same year that the contactless spending limit per transaction rose from £20 to £30, which likely expanded the number of eligible purchases.