Contactless: The overnight success story 10 years in the making

By Nick Mackie, Head of Chip and Contactless for Europe • Visa

April 26, 2016

“In the digital age of ‘overnight success’ stories such as Facebook, the hard slog is easily overlooked.” – James Dyson

Did you know that the word “contactless” was one of the Collins Dictionary’s words of the year last year? Along with “manspreading”, “binge-watching” and “ghosting”, this so-called “new” form of payment was finally recognised as a trend. Launched in 2007 to give consumers a quick and convenient way to pay for low-value items, contactless had truly humble beginnings in corner stores and coffee shops.

Fast forward nearly a decade and Visa Europe reports there are more than three million contactless terminals servicing over 152 million contactless cards throughout the continent. And consumers have embraced contactless with enthusiasm. Last July, Visa Europe processed more than 1.1 billion contactless transactions in the 12 months. Today, it’s processing that amount every six months, with the growth continuing in a sharp upward momentum.

But, while contactless cards currently have the starring role in this trend, contactless technology is central to the future of payments, as well. This is why Visa Europe has made investment in contactless a priority for the organization – because innovation doesn’t stand still. To support the evolution of payments, Visa has mandated that, by the end of 2019, all POS terminals will be able to accept contactless forms of payment and access for every consumer to some form of contactless, be it card, mobile payment service, wearable or a new piece of tech which has yet to be unveiled.

Why has Visa placed such an emphasis on contactless? Because contactless is rapidly evolving from cards to other devices as payments become digitised, with Europeans among the world’s earliest adopters of these new technologies. Visa sees a future where consumers might not even need a plastic card – a future where their account is digitally available across a plethora of devices. From the integration of payment capability into a health tracker so that someone can stop to buy a water while they’re on a run to the addition of a “chip pocket” to a ski jacket sleeve, simplifying payment for lift tickets to the design of a range of fashionable accessories to wear on the town, wearables will play a significant role in the future of payments and the contactless infrastructure will support it.

Contactless: The overnight success story 10 years in the makingLast autumn, Visa challenged five of Central Saint Martins’ young designers – all either students or graduates of the MA Industrial Design course – to explore the next frontier of frictionless commerce, imagining the form and functionality of contactless wearable devices by 2020. The designs had to be geared specifically towards payments while also challenging the wearable norms that the industry has focused on to date.

The project culminated in a presentation of the three co-created design concepts at the Visa Europe Technology Partner Forum in London and is an example of how collaborative innovation is driving the rapid pace of change in payments. The finalists were:

Small Change” is set in the moment of transition between cash and digital money, and helps people manage transactions of smaller denominations digitally. It aims to facilitate this transition away from coins by allowing people to collect their loose change onto one wearable device, at the same time keeping the tangibility that we have come to expect through thousands of years of cash usage.

Budgeteer” is a wearable payment device placed on the wrist that helps the user to organise and budget their expenses at the point of sale, simply by movement. By making three intuitive and simple hand gestures, the user can categorise payments into three categories (work, me or home),which will be highlighted in different colours in their online banking statement.

Thread” is a fashion-orientated brooch that bridges the gap between the online and real-world self through a Bluetooth-powered augmented reality app, turning anonymous fashion lovers into identifiable brand ambassadors.

Spearheading the project, Nick Mackie, Head of Contactless at Visa Europe, said: “At Visa, we envisage that contactless technology will become a standard feature on many wearable devices by 2020; in fact, there’s no reason why the payment function on a wearable device wouldn’t become as ubiquitous as the alarm function on a digital watch.”

There is tremendous potential in the wearable payments space, which is growing in popularity – especially among the tech-savvy millennial market. Wearables take all that’s great about contactless – the speed, convenience and simplicity – and make it better still. The very essence of a wearable is its physical connection to you at any time, which by nature eliminates friction and improves security.

As new products continue to roll out at a pace that would have seemed unimaginable when contactless first launched in 2007, Visa will continue to partner with companies so that consumers will be able to pay for the items they want wherever they are and on whatever device they prefer.

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