21 June 2016
Contactless payments in order to boost Italian consumption and competitiveness
More and more often, we happen to hear people talking about a near future in which we will not use cash anymore. According to some, it could even happen within 2025. Actually, the world of digital payments is going through a period of great ferment. Technologies applied to financial transactions are becoming more and more innovative and accessible like the Identity Check App by Mastercard, that allows authorizing a payment through a simple selfie. In a recent blog we wrote about the usage of contactless payments in Europe, but what is the status in Italy? The Italian citizens that are traditionally bond to the use of cash are now showing less scepticism towards the news that are claimed as apparently ground-breaking.
The trend has grown because of the highest propensity of the end-users to use smartphones or tablets for online purchases of goods and services. In Italy, even though the number of cards per capita is among the highest of Europe, in terms of digital payments, we still have such a very long way to go. Evidence by the figures recently released by Visa Europe show that in the last 12 months – from May 1st 2015, to April 30th 2016 – 3 billion contactless transactions were made on Visa network, that means over three times towards what was registered for the same time of the previous year. But still: Italy finds itself one step back.
If in Europe contactless payments are 1 in 5 (21%) in Italy they are just 1 in 20 (5%).
The bright side of the story is that contactless payments methods are increasingly being used and appreciated by Italians. In March 2016 there were 1.54 million contactless payment operations against the 120.500 operations of March 2015.
Given that any payment is one of the most common standard habits of our lives, the development of digital payments must comply, as much as possible, with the customers’ habits. Combining technological innovation to user-friendliness leads to the ultimate goal to aim to reach forms of payment in which the customer does not even realize of the paying itself. Contactless payments should have three main features: they have to be safe, comfortable and fast. The new app Ticket Restaurant Mobile, developed by Endered, definitely moves in this direction. It allows using meal vouchers via smartphone, in contactless mode or through PIN code. The function “catering services locator” is also included and carried out in cooperation with TripAdvisor.
The success of contactless payments is effectively due to the increasing number of shops that are now accepting them: since 2013, they have increased their number from 1 in 60 to 1 in 5, with 3.2 million devices available in shops and catering all over Europe. Data shows that such a payment method is basically bound to food: shops that are experiencing a higher growth are the catering related ones (153%) and they are followed by small shops (146%), supermarkets (119%), cafés and fast food (96%).
The aim of Visa within 2020 is to bring to every point of sale the contactless technology devices and provide the customers, at least, one contactless payment device (among credit cards, smartphones and wearables). Others offer solutions that allow to back NFC up for all the operators that haven’t upgraded their solutions yet. During the last edition of Money20/20 Samsung submitted MST (Magnetic Secure Transaction), which is a solution that allows using old-generation readers through a simple software upgrade.
Back to the figures shared by Visa Europe: more than 70% of all the cash payments are below 15 EUR and they are carried out within storekeepers that traditionally were not used to accept cards for such an amount. One of the main reasons is that retailers and the consumers usually consider the use of payment cards, as for small amounts, less quick than cash. The introduction of the contactless technology has changed the scenario and it will play a more significant role as for the payments industry.
Consumers in Poland, Spain and the United Kingdom are the major users of contactless payments. In particular, the adoption of contactless payments has grown by 300% as for number of transactions. It was also supported by the launch of Apple Pay, Android Pay and a range of payment wearables by Barclays, and by the transportation services Transport for London (TfL). According to a study by Certet Bocconi in collaboration with Mastercard, based on the TfL experience, if the means of transportation of the metropolitan area of Milan (Malpensa Express included) would offer the possibility of digital contactless payments via credit card at the turnstiles, a benefit of more than 200 million EUR could be generated in ten years hand in hand with a growth of passengers in 32%.
It is way too soon to tell when Android Pay and Apple Pay solutions will be effectively available in Italy, but some Apple users found that in the Beta 6 of iOS 9.3, by clicking on “Wallet”, a few references appeared as far as the upcoming Apple Pay in Italy. The arrival of such solutions could represent the keystone of the wide spreading of new digital payments in Italy. They could lead, in case they were supported by a political engagement, to a significant decrease in fraud and tax evasion, they could even provide an effective form of fight against black economy, and a relaunch of the Italian consumption and competitiveness.