According to the British Retail Consortium’s recent figures, such alternative payments now make up about 5 per cent of retail sales in the UK – still low, but growing at a rate that indicates increased acceptance. Meanwhile, use of cash was 10 per cent down on 2011.
The implications are promising, not just for the card companies and banks that have invested a lot in persuading consumers how convenient contactless technology is, but also firms such as PayPal. The US-based payments company launches its first UK TV ads this month, aimed at generating awareness that PayPal can be used to pay for goods at a range of retailers, not just eBay.
More interesting, though, are its trials of a location-based option on its mobile payments app. It’s currently only available at selected independent retailers in west London, as well as Thai restaurant chain Busaba Eathai, where customers can order via the app as well as paying. But assuming the technical aspects work smoothly and reliably for both consumers and retailers, it looks like a proposition with potentially widespread appeal.
When logged into PayPal’s existing mobile app, users can see a list of nearby vendors. ‘Checking in’ to the location will cause the photo associated with the user’s account to show up on the retailer’s checkout screen, enabling them to confirm the purchaser’s identity, at which point the user can transfer the funds from their PayPal account.
Where this kind of facility could go beyond contactless cards is in giving stores and restaurants the chance to help their loyal customers to take advantage of discounts, and to encourage them to give feedback or pass recommendations on to friends in exchange for rewards. It’s the kind of thing that loyalty schemes at Costa Coffee and Subway outlets already do well, but would mean that the consumer doesn’t have to carry a card or keep receipts and that retailers don’t have to invest in running the schemes themselves.
The proviso, of course, is that shoppers need to get used to using apps as payment methods. That means payment brands need to start concentrating on convincing consumers that they’re more than just a logo on a plastic card or in the bottom corner of a website.