Contactless payments offer retailers the potential to increase revenue by reducing queuing times, according to a new study which demonstrates that contactless transactions can create more than £700m new revenue for retailers by freeing up queuing time for customers to make new purchases.
A field study by global strategy and marketing consultants Simon-Kucher & Partners last month revealed that the average contactless micropayment transaction (purchases of £2-£15) takes approximately 12.2 seconds – less than half the time for a chip & pin transaction (27.0 seconds) – reducing queuing times by almost 15 seconds.
The study concluded that the UK retail sector could benefit from an additional 83 million purchasing events – worth more than £700m new revenue opportunities – by migrating chip & pin low-value micropayments to contactless cards.
Georg Wuebker, global head of banking at Simon-Kucher & Partners, said, “The majority of studies only review the potential for migrating cash transactions to contactless. This study assesses the economic benefit of the time saving generated by migrating low value chip & pin transactions to contactless, which will have far reaching implications along the whole payments value chain.”
The total number of chip & pin micropayments for retail purchases is around 35 percent, claimed Simon-Kucher, and contactless infrastructure is expanding and Barclays estimate that 12 million contactless cards will be in circulation in the UK by the end of 2010, using more than 42,500 terminals.
To reap the benefits of migrating low-value chip & pin transactions to contactless, communication is essential, claimed Jens Baumgarten, UK/US Banking Partner with Simon-Kucher & Partners. “There is always a debate around ‘customer pull’ and ‘technology push’ to change payment behaviours,” he said. “There have been a number of campaigns promoting contactless, such as Barclaycard’s One Pulse so it is not completely new.
“However, most people still do not realise that they have a contactless card and can use it for micropayments. In addition, retail outlets with contactless terminals need to promote this and help educate their customers to make contactless payments. Only by doing this will the full benefit be realised.”