Paying for things in shops by simply holding your mobile phone against a reader is becoming more common. Payments like these are known as contactless mobile payments, and their use is expected to increase further in the UK. We expect this to happen as:
- more people start using contactless mobile payments
- there are more contactless-enabled point-of-sale terminals
- more retailers accept higher values of contactless mobile payments (sums over £30)
This rapid growth could affect all three of our statutory objectives – to promote competition, innovation and the interests of the people and organisations that use payment systems.
To make sure our understanding of the sector is up to date, we asked for information from key stakeholders through a ‘Call for Information’ last year.
What are contactless mobile payments?
Mobile payments are payments which are initiated, transmitted or confirmed on a mobile phone or device. This can apply to online or offline purchases of services and digital or physical goods.
There are two broad categories of mobile payments:
- ‘remote payments’, which mostly take place through the internet
- ‘proximity payments’, which generally take place directly at the point of sale
Contactless mobile payments are proximity payments where the phone or device is held near a reader module at the point of sale (for example, in a shop or on public transport). They require specifically equipped smart mobile devices which the readers can recognise.
What have we done so far?
To helps us understand more about contactless mobile payments, we issued information requests to a wide range of selected participants in the contactless mobile payments sector in the autumn of 2016 and a further information request in the summer of 2017, using our powers under the Financial Services (Banking Reform) Act 2013. This followed an initial engagement with the relevant stakeholders where we requested their comments on our draft information request.
These information requests were designed to give us a better understanding of topics including who offers contactless mobile payments, what services are available, what mobile devices are used, and the role of tokenisation, among others.
We spent some time considering the information we received and have produced our report detailing our work and conclusions.
What happens next?
Contactless mobile payments are a fast-developing feature of the payments sector. We will continue to keep the sector under observation, retaining the option to investigate and to act as we believe necessary to address any problems we may identify or that may be brought to our attention in the future.