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Home Insights & Advice The use of contactless cards around the world

The use of contactless cards around the world

by Rob Binns
30th Oct 19 2:48 pm

If you’re a Londoner, then chances are you have a contactless card. That’s not some kind of broad brush, millennial generalisation, either – it’s statistically probable. 70% of our big city’s denizens use contactless, while in the Midlands (71%) and East Anglia (72%), it’s even more popular.

But what about beyond our borders? The UK may have taken to contactless like a duck to water, but have the choppier seas of international markets followed suit? And across the pond, what does our American friends’ collective contactless card usage tell us about the rising tide of the cashless society?

Read on, as we unpack how contactless cards have taken off across the world’s biggest economies. Which countries are ahead of the curve, who has a long way to go – and, more importantly, why?

Let’s take a look.

Contactless slow to take hold in the US

Ah, the land of the free. But, as it turns out, not contact-free – just yet, anyway. Because, although around 56% of transactions in the USA take place with card, contactless payments make up less than a single percent of these.

Yep – the US has been slow to cash in on the big benefits offered by contactless – only around 4% of cards in force in the US are contactless-enabled. The result? Retailers that are hampered by a reliance on card insertion, pin entry, and signatures to accept payments, and slower service.

But why?

The situation in the US can probably be largely put down to the sheer size of its market. The large number of stores and banks in the US paint the picture of a more fragmented retail space. Through this lens, it’s easy to see why the speedy, sweeping changes towards contactless dominance seen in the UK simply haven’t translated to the American market.

The China situation

A quick jump over the Pacific takes us to global powerhouse China. Like the US, China boasts a huge population, and a status as a major tech producer and innovator. But when it comes to contactless trends, these colossal countries are chalk and cheese.

Despite around 60% of China’s cards being contactless, the cards themselves are only used for a paltry 6% of actual transactions. And of these, only about 16% are contactless. The numbers are super low – how do we account for them?

Through mobile wallets, that’s how. China has the highest mobile wallet penetration in the world by a long way, with the payment method accounting for an enormous 36% of all point of sale (POS) transactions.

China’s high smartphone penetration rate, along with the nationwide popularity of QR codes, have combined to see mobile payments become the country’s favourite way to pay. Rather than tap a card, Chinese consumers simply scan the merchant’s QR code with their smartphone – whether they’re buying a coffee, or paying a busker on the street.

Aussie appetite for contactless

Despite America’s reticence to embrace tap and go payments, many ‘US-like’ countries have proven that the hunger for contactless extends beyond English shores.

In Australia and Canada, for instance, around a third of all card transactions are contactless, with about two thirds of cards already equipped with contactless technology. New Zealand and Ireland boast similarly high rates of contactless penetration, while France, Italy, and Germany are all getting there.

And they’re not just getting there – they’re getting there fast. What we see in all these cases is Western countries (aside from the US) adopting contactless at breakneck speed. Australia’s first contactless card only appeared in 2009, while the UK and Canada adopted the tech just a couple of years earlier.

In contrast, first adoption in contactless-shy countries including the US (2003) and China (2005) came much earlier – and still hasn’t gained traction.

The outliers or the norm?

So, what about the rest of the world? Well, while the UK, Australia, and Canada can be seen as being ahead of the curve when it comes to contactless, they’re still very much the outliers.

Even amongst the illustrious company of the world’s biggest economies, contactless usage still has a long way to go. In developing countries like Brazil, Mexico, and India, contactless cards still account for as little as < 1% of all transactions at the POS.

In Africa, the existing infrastructure for accepting contactless card payments is still insufficient. And, in the absence of affordable, secure technology for merchants to start accepting contactless payments, developing countries will remain marooned on an increasingly lonely island of cash-only payments.

Plus, while basic forms of mobile payment (such as M-Pesa) are starting to take off in countries like Zimbabwe and Kenya, they’re sadly still hamstrung by high fees, and the sheer amount of steps involved in the transaction. Furthermore, the acceleration of contactless in developing countries such as these may be further stymied by a negative attitude towards governments and banks.

The opposite effect of this can be seen across the Scandinavian countries. In Sweden and Norway (where cash makes up less than 2.5% of the total money supply), inherent trust in institutions has no doubt contributed towards the rapid move away from cash.

The same might also be said of Asian countries such as South Korea and Singapore, both of which are edging towards card-dominated economies fuelled by cashless strategies.

So, is contactless becoming the new norm? Or are the pioneers still the outliers?

Author

Rob Binns writes for Expert Market, a leading B2B comparison site empowering businesses across the UK and beyond. He specialises in analysis of merchant accounts and the payments industry. He’s happiest when unpacking the latest contactless trends and technologies, and discussing what these insights mean for business owners. His work has been featured in several notable publications, including PaymentsJournal and Essential Retail.

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