According to a recent report by Australian bank Westpac, contactless payments via mobile will reach A$3 billion in Australia by 2015. In Australia, mobile-based contactless payments have accounted for 60% of all debit-card transactions in the past 12 months. The growth can be attributed to the proliferation of smartphones that come with features, such as NFC, that make it possible to perform contactless payments. An ACMA Communications report shows that, in May 2013, there were already 11.19 million smartphones in Australia.
The market is seeing major banks, such as Westpac, signing deals with mobile manufacturers like Samsung to further drive contactless payments. Bank customers who own NFC-compatible phones can easily use their devices at contactless terminals compatible with MasterCard PayPass and Visa PayWave. Other card issuers, such as Cuscal, are opting for innovative payment technologies like Host Card Emulation (HCE) through mobile payment apps.
For bank customers who don’t have NFC-enabled smartphones, solutions are available in the form of NFC stickers, which can be affixed to the phone. For example, Commonwealth Bank provides such stickers, via a service called PayTag, for a one-time fee of A$2.99. Even retailers are doing their share of supporting mobile payments via initiatives such as the launch of dedicated mobile wallets. Well-known retailer Coles recently implemented PayTag technology into its credit-card programs. Coles and other retailers, such as Woolworths, have also actively deployed contactless terminals across their stores.
In Australia, contactless card payments will remain the mainstream way to pay, with other areas, such as loyalty cards and transportation, also adopting contactless card payments — with paper tickets being replaced by smart cards. The market may also witness the advent of wearable wallets. Several banks, including Barclays in Britain and CaixaBank in Spain, have already launched wearable payment solutions in the form of wristbands and wristwatches.
Westpac is trialing its Cash Tank app on Google Glass to give users access to their account balance through the technology. And St. George Bank has launched its mobile banking app on the Sony SmartWatch2 and plans to add banking capabilities to other smartwatch devices, including Samsung and Pebble.
Security has also been an area of strong focus in the development of contactless-payment offerings in Australia. Each contactless transaction is identified by its own unique identifier. This 16-digit number is generated by a contactless-enabled terminal with every NFC tap, making it almost impossible to replicate. Chip-and-pin-based authentication has been mandated across all card-payment terminals in Australia.
Australia has come a long way in the field of contactless payments, with the first contactless offering launched in 2000 involving the use of EMV-chip-based cards. Visa now estimates that there are 100,000 contactless terminals and over 1 million contactless transactions made per day, with contactless-card transactions representing over 10 percent of all card transactions.
“At the moment we've got 47 percent of our face-to-face payments that are contactless in Australia,” said George Lawson, Visa Australia’s senior director for emerging products and innovation. “Nearly one in two presenting their card at point-of-sale is from a contactless perspective. So there has been a phenomenal uptake when you think about it in that context, and Australia is leading the world in terms of this level of contactless. We have 51 million contactless transactions per month, so it's well and truly gone beyond that tipping point; consumers are now essentially expecting that kind of contactless experience at the point of sale.”
MasterCard has 320,000 tap-and-go-enabled cards on the market. Set to join the bandwagon of contactless payments soon is Eftpos, a point-of-sale system in Australia. The company behind this system expects to begin rolling out Eftpos chip cards later this year, giving cardholders the ability to conduct contactless transactions and providing tough competition to rival contactless-payment methods.