from industry analysts East & Partners Europe (E&P Europe) has found
rapidly changing payments behaviour amongst UK SME card-accepting
merchants, with a strong shift in online and contactless transacting.
1293 SME merchants nationally were interviewed in the latest round of
E&P Europe’s Merchant Acquiring markets program. The dominance of
debit acceptance continues, although credit card engagement is growing
as both merchants help direct acceptance traffic at the point of sale
and consumers become savvier in their use of their card based credit.
Virtually all credit transactional growth is occurring online with a
2.3 times increase in the proportion of online credit card transacting
over the past four years being reported by merchants.
Beyond these dynamics is growing use of contactless card acceptance by
merchants. In terms of high street, terminal present merchants, the
average proportion of all card volumes being accepted that is now
contactless has reached 8.2 per cent, with the vast majority of these
cards being debit.
This connects with February data from the UK Card Association, showing
there are 84.2 million contactless cards in the UK as of February this
year. In 2015, consumers spent £7.75 billion on contactless cards,
compared with £2.32 billion in 2014.
Further illustrating the rise of the new payment technology, Visa
Europe has recently reported that one in five in-person card
transactions are now being made with a contactless card.
According to the
payment service provider, it facilitated around 3 billion contactless
transactions in Europe over the course of the last 12 months (with the
majority of transactions in the UK), tripling levels from a year ago.
This has happened from a near standing start over the last two years
only when card issuers ramped-up issuance of contactless cards in the
UK, particularly debit, and the distribution of contactless-accepting
POS terminals has become more widespread. It is on a trajectory to
reach 15 percent of all such transacting by the end of 2017.
Cash is clearly slowing as a payments mechanism for high street
merchants but is doing so slowly, reducing its proportionate slice of
the payments cake over the past four years by a modest 2.8 percent.
Clearly, a rump of both merchants and consumers continue to prefer the
use of cash for its convenience and non-traceable values.
Cheques as a payment tool, however, are declining rapidly – dropping
their relative share by 21.8 percent since 2012. Increasingly being
used for special / out of the ordinary payments, cheques are
considerably more prominent in B2B transactions than consumer
payments. They remain favoured where complex authorisation and
signature processes are required by the merchant.
Some of these changing payment patterns are being driven by Fintech
disruptors with new acceptance technology but in our evidence based
view, the vast majority reflects the natural evolution of payment
options and solutions matching changing demand-side behaviour
occurring in the markets; a complex matrix changing almost by the day.