What impact will the recent increase in the contactless payment threshold from £15 to £20 have on retailers?
Last month, the contactless payments threshold rose from £15 to £20, meaning that 45% of retail chip-and-pin payments now fall under this threshold, up from 35%. As a result, customers can make nearly half of their retail card payments using the alternative method.
It is in retailers’ interests to promote this form of payment, says Simon-Kucher & Partners director Ben Snowman. According to a study by the company, there would be a time saving of about 15 seconds per sale – it takes 12 seconds for a contactless transaction versus 27 seconds for a chip-and-pin payment.
“Contactless payments have always been seen as a cash alternative. Now that 45% of card transactions are eligible, migration of chip-and-pin payments to contactless must be taken seriously,” says Snowman. “The first true test will be during the Olympics when contactless terminals are being widely deployed.”
However, for the technology to succeed, retailers must train staff to help customers use it. As the popularity of contactless transactions grows, the growth in uptake of contactless payment terminals is inevitable. Therefore, success of the format will be self-propagating and customer satisfaction can be boosted by reduced queuing times.
Chethan Sharma, head of consumer and retail and partner at Simon-Kucher & Partners, adds: “This is welcome news for retailers. New technologies revolutionise how we operate and contactless could play a role in boosting high street business.”