Will European Consumers Adopt New Payments?

Europe is a single region that is home to a bevy of established payment preferences that vary from country to country.

Spaniards like to pay with credit cards, the British, Swedish and French like to pay with debit cards, Italians often pay with prepaid cards and the Dutch prefer to make online bank transfers. At present, these are payment methods that Europeans have grown comfortable with, but how are they responding to emerging alternatives? The payments industry continues to mature and new options such as NFC contactless and mobile payments have been introduced into the market. Will Europeans grow to favor these newer payment methods, and how long before they become mainstream, if ever?

PYMNTS.com breaks down a “Future of Payments” infographic by The Racounteur to illustrate how NFC technology and mobile payments are settling in Europe, and also explores the consumer concerns that are holding back mass adoption.

Contactless Payments

Contactless NFC cards were designed to take over for Chip & PIN with low value payments. Companies hope to achieve increased convenience and communicate that NFC payments can be made faster and easier.

The infographic reported that in 2012 the UK had over 60,000 retailers with contactless POS technology, and 20 million Visa contactless cards in circulation across the country.

Additionally, according to a 2013 Visa Europe report, 70 million payment cards have been issued across Europe. Retailers are reporting high volumes of transactions, such as retailer Marks and Spencer, which reported about 230,000 contactless payment transactions each week.

The advantages of NFC payments include no signature requirements, no PINs and faster checkout queues. Additionally, the study shows that Europeans are in congruence with the notion that contactless payments are the quickest way to pay. When asked about the perceived time it takes for different payment transactions, contactless cards were listed as the fastest, coming in at under thirty seconds for a transaction. Cash came in second, followed by plastic card with PIN, and lastly consumers reported that plastic cards with signatures took the longest time – over 60 seconds.

However, consumers continue to have security concerns when it comes to payments that don’t require entering a PIN. Some Europeans have also expressed that contactless payments are an easy way to lose track of spending habits. Consumers want payments that allow them to better manager their finances, which they argue is not easily achieved with contactless payment methods.

Mobile Payments

Mobile phone penetration rates are growing at a steep rate worldwide. The rate of consumers making mobile payments is also growing, but it will be some time before mobile payments become mainstream. Europe and the Americas are leading mobile penetration rates. When participants were asked when mobile payments would become mainstream, 39 percent of Europeans said it would be another three-to-four years before it became the norm. Thirty-seven percent were more optimistic and said mobile payments would become mainstream within only one-to-two years. Fifteen percent of Europeans said it would take much longer and said at least five-to-10 years.

Those surveyed were then asked about the challenges of mobile payment programs. Security continues to be a prominent concern for most, as the infographic showed 71 percent stating this was the biggest worry.  Sixty-one percent said that integrating new technology and adapting to new systems at POS is the second biggest challenge, and in third was the cost of mobile payment strategies (37 percent.) Following these concerns were regulations (35 percent), privacy (34 percent), complexity (26 percent), reliability (24 percent), and lastly availability (19 percent.)

To look at the infographic look below, or to read the Visa Europe report click here.