In this article, you’ll learn:
How to be contactless ready with a few clicks
What consumers love about contactless payment methods
Contactless payment limits and why they are in place
The rapid rise of contactless (and the steady decline of cash)
NFC mobile payments are a thing and are here to stay
Businesses can access a digital ecosystem that integrates all key functionality such as contactless payments without breaking the bank
Payment methods are fast evolving across the UK. We’ve moved on from the days of cash and cheques to credit and debit cards, and even paying with mobile phones and watches is becoming common practice. Accepting contactless payments is now easier and more accessible than ever, thanks to specialised providers such as SumUp who have created a wide variety of payment terminals, with all the trimmings (including contactless), within an ecosystem of tools and solutions designed to help your business grow, at your pace.
Contactless payments are payments usually made by credit or debit card using the “tap and pay” method with a compatible payment terminal. According to the UK Finance organisation’s “UK Payment Markets Summary 2021”, by the end of 2020 88% of all debit cards and 81% of credit cards were contactless payment compatible.
The technology and processes behind contactless payments has existed since the 90s, with the first handful of contactless payment systems emerging in South Korea at the time. This technology has been put to use in other fields outside of payments, notably for the Oyster Card system by London’s transit agency.
Contactless capable cards are ready to go out of the box. The customer simply places the card within 10cm (about 4 inches) of the payment terminal, and the two devices will communicate to start the transaction. Within seconds, the transaction is processed and if validated by the bank on the back end, then the contactless payment is approved.
Contactless payment works thanks to radio frequency identification (RFID) and near-field communication (NFC) technology. The RFID in the card refers to the chip, which allows the card to communicate with another device. NFC is the communication protocol used by the devices to communicate and exchange data within seconds. This exchange is not limited to payments, the technology is actively used in public transport or some membership cards.
In the UK all payment terminals are equipped with contactless payment capable technology since January 2020, however, a number of businesses are yet to upgrade their hardware. This is usually linked to extra costs from the traditional payment terminal providers, who operate on upfront plus subscription and transaction models.
SumUp has decided on a different approach: you buy your payment terminal, and pay a small transaction on each payment you receive from customers. The barrier to entry has been removed, and you now only pay for what you use, with no subscriptions or hidden fees. SumUp specialiases in payment solutions for businesses, and has developed multiple payment terminals to fit different scenarios. All terminals are equipped to receive contactless payments out of the box, and on the go!
As of October 15th 2021 the contactless limit has been increased from £45 to £100 by HM Treasury and the Financial Conduct Authority. This increase follows another increase in April 2020 from £30 to £45. With prices on most consumer goods increasing, this new limit allows customers to make key purchases in places such as supermarkets and petrol stations using contactless.
This payment limit increase will have a bigger overall effect on consumer behaviours. Potential customers will now expect to be able to make most payments using contactless, and any business not offering this facility may lose potential recurring business. Providing customers with the option to pay with their method of choice is a key to success, especially with the emergence of a number of payment solutions and different card issuers (Visa, Mastercard, Maestro, Amex…).
The UK contactless payment limit stops at £100 per purchase. There are no daily purchase limits or monthly amounts imposed by payment regulators. Although this may sound worrying from a security point of view, the UK Finance organisation has stated that customers are fully protected against losses due to card fraud linked to card theft (as an example).
As an extra security measure, every card will prompt the card holder after a certain number of contactless payments, or a certain spend amount via contactless, to enter their PIN code to verify that they are the genuine card holder.
The tap and pay method has not slowed down, with contactless payments representing 27% of all payments made in the UK in 2020. This is a 20 point increase since 2016, and a sharp contrast with cash, which has dropped 28 points from 45% to 17% of all payments since 2015. According to the UK Payment Markets 2021 report by UK Finance, this sharp decline in cash use can be attributed to the increase in debit card usage, along with the pandemic accelerating the acceptance of contactless payments throughout the country.
Initial figures for 2021 from the UK Finance organisation indicate that contactless is continuing its fast growth trajectory, with 60% of all card transactions in the UK made using tap and pay from January to July, up from around 50% during 2020.
In raw payment numbers, the contactless methods represented a quarter of all UK payments in 2020, about 9.6 billion transactions. Debit and credit cards are not the only contactless capable payment methods, as smart devices such as mobile phones and watches have all the necessary tech to make payments via NFC. About a third of the UK adult population registered for mobile payments in 2020, an increase of 75% compared with 2019.
Contactless is clearly here to stay, with an increase in uptake and new methods such as mobile allowing for even more convenient payment solutions for consumers.
Contactless card terminals are not limited to just cards. NFC payments can be made by any device with the capable technology. The most common devices are smartphones and watches equipped with the Apple Pay and Google Pay applications, but people have been known to get creative and add NFC capable chips to rings, or even directly under their skin!As mentioned above, 32%, almost a third, of adults in the UK have registered to use mobile payment. This represents about 17.3 million people, of which 84% actually made payments, including 8.5 million people who made frequent payments (at least fortnightly). This payment method is rapidly shifting behaviour, and as with most new technological advances, young people are embracing it first, with 56% of 16-24 year olds using their phones to make payments.
All these behavioural changes and technological advances can seem daunting, but there are solutions providers out there that cover the payment needs of small businesses across the country. SumUp has created a range of payment terminals, all of which accept contactless payments, along with NFC mobile payments, thanks to their inbuilt technology.
With over half the total card payments in the UK being contactless, and younger generations leaning on new tech to streamline their payment experience, businesses need cutting-edge hardware to keep-up.
Accept your customers payments, be it by card, smartphone or watch, with one of SumUps industry-leading terminals, without breaking your budget.
Contactless payments, evolving tech, behavioural changes: build a digital ecosystem for your business
With all payment terminals equipped to receive contactless transactions via NFC since January 2020, all new and existing businesses can benefit and offer this payment method to their customers. Now that this tech is standard practice, business owners across the country are looking to get more out of their payment terminal provider.
As far as payment terminals go, SumUp is an industry leader and understands how important flexibility is for its customers to survive and thrive in business. Our devices are all mobile, allowing you to take payments wherever and whenever you need. If you’re at a local farmers market selling your fresh produce, your device can simply connect to the local mobile network (3G/4G), or to a stable WiFi connection. At restaurants and cafés, staff can carry the small SumUp Air in their pocket, taking payment wherever the customer is seated, reducing stress at the till and wait times.
We have merchants who are band members selling merchandise on tour, dog trainers working outside in the local park, and comic book convention exhibitors who all use SumUp’s card readers wherever they need.
To support small and growing businesses, SumUp has built an ecosystem that extends beyond accepting payments, allowing you to manage invoicing and to provide gift cards to increase customer loyalty. Everything is designed to help you grow your business at your own pace, and runs on the same pricing model: pay for what you use. This has allowed us to set-up a free online business account which comes with a complementary contactless mastercard, and a full eCommerce suite to build out that online store you’ve been dreaming of to expand your business nationally and beyond.
Have questions? We’ve got you covered
Accepting contactless payments can feel like a step into the future, especially when it comes to choosing the right device. We’ve compiled a list of frequently asked questions to help you understand the world of contactless and NFC.
How to use a contactless card?
How do I set up contactless payment?
How much can you spend on contactless before hitting limits?
How many times can you use contactless?
How do I know if a card reader accepts contactless?
Find the right payment solution for your small business today
With SumUp, you can quickly and easily accept credit and debit card payments with your smartphone or tablet.