I recently caught up with Jonathan Vaux Director, New Digital Payments and Strategy at Visa Europe, to discuss the trends he observed over 2014 and the outlook for 2015. In short, 2014 has been a really powerful year for payments innovations. I summarise
some of the main points from my interview and welcome your comments on how you saw NFC and contactless payments change around the world in 2014.
Visa Europe obviously consider the disruptive trends in payments very seriously and have recently undertaken a major reorganisation to better address these changes. They now have a dedicated digital business unit of 150 people, separate from their core business,
and aim to make their services as easy to integrate into banking and payments apps as possible.
Key global trends in contactless payments over 2014
Jonathan considers the year 2014 to have been a tipping point for NFC payments. With the launch of Apple Pay some technologies got legitimised. There has been important traction in biometrics, with TouchID for instance. Also, the technologies are becoming
Tokenisation is another major development. The use of a surrogate rather than the actual card number in many of the stages of a payments transaction is significant, as are developments such as the evolution of services such as Stripe to an open API approach.
Investments in Tokenisation will need a strong business case especially considering the downward pressure on charges. The negative incidents of theft of credit card data could precipitate the use of new technologies, but the trajectory in Europe is likely
to be different to that in the US. Thanks to the implementation of Chip and PIN, Visa Europe finds fraud rates relatively low as compared to the US, and there is more reluctance to use less safe technologies.
It is all about offering a great consumer experience and getting the core proposition right
At the end of the day Jonathan sees focus on consumer experience to be critically important. At the end of the day consumers look to retail banks to keep their money safe and protected. This is a hygiene factor they will demand, but increasingly they may
shift for more convenience - something observed in the traction that PayPal obtained.
Why the Transport for London (TfL) contactless payments launch is so important
A lot of services fail as they don't become habitual. This is where the TfL laundh is so significant. For those who travel around London the use of contactless payments on TfL underground and buses in London is becoming an easy extension of a very familiar
experience of making card payments, something people have been doing for years.
How has mobile contactless payments fared so far?
Jonathan was unable to share specific data on this but in summary, most transactions are still predominantly using contactless payments cards. However the launch of Apple Pay in the US is expected to further focus players across the ecosystem to grow their
share of transactions. Operator-driven projects are likely to see more focus and we'll hear a lot about wearables in 2015.
Europe is not just one market
It is hard to generalise when it comes to countries in Europe. We discussed how each sub-region differs and the important developments in Poland for instance, with the plans of nine Polish banks to launch Visa Cloud-based Mobile Contactless Payments early
this year. A significant challenge is the continued use of local processing solutions in spite of efforts to create pan-European solutions.
Technologies to track over 2015
We discussed some of the main technologies we're likely to hear about, including NFC, HCE, QR Codes and more. Visa is agnostic to these and expects to work hard towards supporting them all as they evolve over 2015.