The rise of contactless payments is perhaps the best example of how fintech has changed our everyday lives.
While tapping debit cards to pay for groceries has become second nature to many, the technologies involved are now increasingly being adopted by everything from taxis to tourist attractions.
Lothian’s Skylink bus services this year became the first in Scotland’s east coast to allow passengers the ability to pay with contactless technology – meaning the days of having to scramble for the exact fare in change could soon be over.
Last year, heritage and modern technology came together when a replica bust of Robert Burns at the poet’s Birthplace Museum in Alloway was fitted with a contactless card reader as part of a National Trust for Scotland fundraising effort.
There’s no doubting this tech is everywhere. But how widespread has usage of contactless and mobile payments become?
From the results collated in an exclusive survey, carried out by market research platform OnePulse, we can offer a snapshot of how Scots approach the innovative payment methods which are seeing us use less cash in our everyday lives.
The online poll revealed that Scots are slightly more frequent users of contactless technology than those in England.
The number who said they used contactless technology “very often” in Scotland stood at 73 per cent out of a sample size of 392 participants. In England, 72 per cent of respondents were frequent users out of a sample size of 715.
The second part of the survey, the figures from which are detailed in the remainder of this article, had a sample size of 435 in Scotland and 750 in England.
The poll found that Scots are also more likely to use mobile payments than their counterparts in England. Of those who responded, 57 per cent said that they had used mobile payments compared to 52 per cent down south. And Scots were also ahead when it came to the use of budgeting apps – at 28 per cent compared to 23 per cent.
“These results indicate Scotland’s move, as part of the wider global trend, towards embedding technology into our everyday financial lives,” says Chris Brown, a senior consultant at Deloitte.
“With the majority of respondents having used contactless or mobile payments, it is clear to see that these relatively recent forms of technology are being adopted quickly.
“Scotland’s citizens swiftly embracing fintech will not only improve the everyday financial services offered, but also it will help support and encourage the next wave of Scottish fintech innovation.
“In the very near future, the question may well be ‘who isn’t using this technology?’ rather than ‘who is?’.”
The survey also found that the use of contactless drops significantly among Scots on low incomes. Of those earning £10,000 or less per year, 25 per cent said they had never used the technology compared to 13 per cent among those who earned between £30,000 and £40,000.
It may come as no surprise that younger Scots are more likely to have embraced the technology – with 91 per cent of respondents aged 35 to 44 saying they used contactless, while mobile phone payments usage was highest in the 18-to-20 age range, with 63 per cent on board.
Stephen Ingledew, chief executive of FinTech Scotland, suggests that some people would likely have made a mobile payment without realising it, given its broad definition.
He explains that lower usage among older Scots was more likely to be down to force of habit, rather than a lack of faith in new technologies, adding: “There is a trust element to a certain extent but it’s not the whole picture.”
“When cash points really started to take off in the 1970s, with Scotland at the forefront, people – from a generational point of view – still felt much more comfortable going into a bank, rather than relying on a hole in the wall. And that was more down to habit, because that’s what they are familiar with from growing up.
“Changing from cash to contactless payment is a behavioural step change that is unlikely to happen overnight.”
Ingledew said contactless technology would eventually lead to so-called “frictionless” apps – a method of using data from devices, apps and websites to integrate buying opportunities as simply and seamlessly as possible into consumers’ everyday activities.
“There is this merging of fintech, biotech and life sciences,” he continued. “Technology will become part of us. Whether it’s in our fingertips, in our iris, or a chip that is embedded in us. It’s being tested where you could walk in a shop, collect your items and you will automatically be billed. It’s frictionless payments.”
Industry research has found that the use of physical money dropped 15 per cent in the UK last year, while contactless debit and credit card payments rose by 97 per cent in 2017to 5.6 billion, with almost two-thirds of UK citizens now making contactless payments.
Stuart Murdoch, head of the financial services regulatory and disputes team at Burness Paull, points out that there is now a number of challenger start-ups looking to disrupt the retail payments market.
He says: “The contactless era opens up the point-of-sale payments market to much fiercer competition by breaking down some of the barriers to entry which have protected the likes of Visa, Mastercard and American Express.
“One major benefit of contactless is that the near-field technology used in cards can just as easily be inserted into a smartphone. The phone, in turn, gives the consumer an interface from which to make choices about which payment service it uses. The scope for improved competition – and lower costs – is clear.”
Murdoch adds that trust issues with contactless payments all but “vanished” when fingerprint technologies were adopted.
Our survey found that 74 per cent of respondents in Scotland had used finger print scanning already, with its increasing adoption by smartphones being a primary driver.
“The time lag in adoption of contactless technology does not seem to be based on rational consumer trends,” Murdoch observes. “In some cases, like in the US, uptake has been slowed in circumstances where wet ink signatures were still a requirement for card payments until April 2018, and infrastructure for contactless is still not fully deployed.
“To the extent that there is a security concern about contactless payments, due to the lack of PIN requirement, this all but vanishes when payments are made via smartphones with advanced security features such as fingerprint and face recognition.
“These security features have facilitated authorisation of payments over the £30 limit, although consumers and merchants alike seem to have some confusion about the circumstances in which the limits can be avoided.”