Chip and PIN at 10 years - the changing face of payments

Sat Mar 19 2016

It’s 10 years since tapping in a four-digit number when making Chip and PIN card purchases became a mandatory requirement in the UK.

The payment technology – which was first introduced by Barclaycard as a trial in 2003 – has been an essential part of our retail lives since 2006. That means, unless you’re an autograph-happy celebrity, you probably sign your name a lot less these days than you used to. 

But for many people, it feels like Chip and PIN has been around for longer. Could that be because of the phenomenal pace of change since its introduction?

It’s certainly possible. While you may not have seen your flamboyant squiggle as much over the last decade, you – and your business – will have seen a lot of innovation in payment systems.

The rise of contactless

The reasoning behind the technology was that it would increase security and speed up the payment process. It has been a huge success. Recent research by Barclaycard1 shows that 75% of merchants process sales made with Chip and PIN.

Yet other, newer technologies are eating into its share of transactions. Contactless is one of them.

Credit and debit card payments using contactless rose by 164% last year2. A third of merchants now take contactless payments, and a further 17% are planning to take them in the near future.

Card acceptance among UK merchants

The percentage of merchants using Chip and PIN and contactless

Barclaycard customers now make more contactless transactions in a single calendar month than were made in the whole of 2013.

“The payments industry is continuing to advance at such lightning pace that it’s easy to forget the days of magnetic stripe cards and the clunky carbon copy ‘zip zap’ machines,” says Tami Hargreaves, Commercial Director, Digital Consumer Payments at Barclaycard.

“While 10 years ago Chip and PIN was seen as revolutionary for speeding up the transaction process, the recent rise in contactless has made buying and selling even faster, making it a win-win for both shoppers and retailers.”

The future is mobile

Contactless payments have lower processing costs than cash and a faster transaction process than Chip and PIN. Matthew Haines, VP Contactless Business Manager, Digital Consumer Payments at Barclaycard, says it is a “no brainer” to promote them to every consumer spending up to £30.

That’s especially true considering that 19% of people feel annoyed if they can’t pay by contactless*. Annoying customers is rarely a good business strategy, but it doesn’t just highlight how important it is for retailers. It also shows how ingrained contactless has become in people’s lives.

DogTown, London, use Chip and Pin

 

But development hasn’t stopped. James McDonald, Barclaycard’s Head of Strategic Initiatives and Innovation, says the big story now is mobile payment solutions

These come in several guises, ranging from Near Field Communication that allows you to use phones in place of contactless cards, to making payments directly from bank accounts using mobile banking apps.

What’s important for businesses is staying abreast of the latest developments, and bringing them into their own operations when appropriate. After all, it’s often customers that demand them.

“I think people’s default payment process will change to mobile,” says James.

What’s next?

Barclaycard celebrates its 50th anniversary in June. In that time it has gone from introducing the first credit card in the UK to providing the technology for contactless payments on London’s tubes, trains and buses. And the evolution is not over yet.

“In the 50 years Barclaycard has been in business we’re proud to have been a leading innovator in the payments space, bringing new and secure technologies to both businesses and consumers,” says Tami. “We’re looking forward to what the next half century will bring.

Speak to us today to find out how we can help your business – 0800 0466814 **


Sources

1 An online survey of 305 retail business owners aged 18+ was conducted between 25th and 27th August 2015. A separate online survey of 2,003 UK adults aged 18+ was also carried out between 25th and 27th August 2015. Results have been weighted to nationally representative criteria. All research was conducted by Opinium Research.

2 Barclaycard data comparing 2014 to 2015 contactless spending. 2.6 times annual spending increase is calculated as follows: (2015 total Spend figure – 2014 total Spend, divided by 2014 Spend).

Please note that the views expressed in this article are personal opinions. Barclaycard cannot accept any responsibility or liability for reliance by any person on this article or any of the information set out in it.

*An online survey of 305 retail business owners aged 18+ was conducted between 25th and 27th August 2015. A separate online survey of 2,003 UK adults aged 18+ was also carried out between 25th and 27th August 2015. Results have been weighted to nationally representative criteria. All research was conducted by Opinium Research.

**Calls to 0800 numbers are free from UK landlines and personal mobiles, otherwise call charges may apply. Please check with your service provider. Calls may be monitored or recorded in order to maintain high levels of security and quality of service.

Want to accept card payments?

Call us

If you need to speak to an advisor, give us a call on:

0330 159 6407

 

Request a call back

Fill in some details and we'll call you back


Find a solution that's right for you