With Visa debit card spending for online purchases reaching new heights in Europe and the United Kingdom, the timing appears right for consumers to tie those cards to mobile payments.
At least that’s what Visa Europe is hoping.
In fact, Visa Europe predicts that the rising popularity of electronic payments and new technologies will result in more than half of all Visa transactions taking place on a mobile device by 2020.
Visa Europe expressed its vision of a mobile-payment future as part of its Jan. 17 annual report on Visa card transactions throughout Europe and, specifically, the United Kingdom. Executives for the card association believe consumers use of debit cards online will translate over to using the cards for purchases through digital-wallet technology or online purchases through mobile devices.
For the first time, consumers throughout the UK last year used a Visa card for one-third of their overall spending, the annual report stated. Throughout Europe, consumer spending with Visa cards rose 14% in 2011, to 1.16 trillion euros (US$1.66 trillion), the report noted.
Consumers used a debit card for nearly 80% of their Visa transactions throughout Europe and for 90% in the UK, Visa Europe reported.
Increases in online spending fueled the percentage hikes cited in both the UK and Europe overall, Peter Ayliffe, Visa Europe chief executive, stated in a press release.
Consumers making online purchases accounted for 22% of all Visa spending in the UK, a 40% increase from a year earlier, Visa Europe reported.
“We expect this growth in electronic payments to continue during 2012, when we will be launching mobile payments and our digital-wallet services,” Ayliffe said. “The mobile-pay and digital-wallet products support Visa Europe’s future payments strategies to the point we predict that by 2020, over half of all Visa transactions will be on a mobile device.”
Visa Europe acknowledged its investments with payment-technology provider London-based Monitise PLC as being key as it moves forward with its mobile payment plans (see story).
In a separate announcement Jan. 18, a Monitise executive applauded Visa Europe’s prediction for mobile-payment advancements. “The surge in mobile payments and transactions anticipated by Visa Europe mirrors the trend Monitise is seeing across its business,” Monitise Group CEO Alastair Lukies stated in a press release.
More than 3,700 European member banks own and operate Visa Europe, which is independent of Visa Inc. but licenses the Visa brand and technology.
Visa Inc. introduced V.me, its digital wallet, last November and plans to make it available in Europe in 2012 (see story).
Overall, consumers spent £318 billion with Visa cards last year in the UK, a 26.7% increase from £251 the previous year.
Visa Europe’s annual report shows the dominance Visa debit cards have in the UK market, one analyst suggests. “The fact that debit accounts for 90% of Visa transactions in the UK is a result of secular trends for debit growth, but also a reflection of Visa's market dominance in the UK debit,” Zil Bareisis, a London-based senior analyst for research firm Celent, tells PaymentsSource.
Visa had more than 90 million debit cards issued in the UK in 2011, the report stated. Through September, those cards completed 7.1 billion transactions.
Figures for MasterCard Maestro debit cards in 2011 were not available, but most industry analysts agree the number of Visa debit cards in the UK have more than doubled MasterCard in the past four years.
Visa’s debit card market dominance became even clearer in 2010 after HSBC Bank PLC and Royal Bank of Scotland Group/NatWest in the UK converted millions of customers from Maestro to Visa debit cards. At the time, the banks cited better purchase protections offered through the Visa “charge-back” policy as their reason for the switch.
The annual report reflects Visa Europe’s own portfolio more than it provides a clear picture of the overall UK card market because credit card use is more balanced between Visa and MasterCard Worldwide, Bareisis says.
However, Visa Europe’s success in growing online transactions in the UK did not occur by accident, Bareisis notes.
Credit cards remain the most popular payment mechanism for e-commerce at 41% of transactions in the UK, but debit card use online also is high at 33%, Bareisis adds.
“Unlike in some other countries with local debit schemes that place restrictions on online debit usage, debit cards can be used online in the UK and increasingly more consumers choose to do so,” he suggests.
In addition, merchants who continue to surcharge for credit card use drive the increase in Visa debit card use for online purchases, Bareisis explains.
In addition to the spending-growth numbers, Visa Europe announced fraud losses on Visa cards reached an all-time low, falling by 23% from a year earlier to a fraud-to-sales ratio of 0.05% in 2011. Visa Europe did not provide actual fraud data.
The success of EMV chip-and-PIN technology drove much of the downward trend in fraud, the report noted.
Visa Europe expects to increase the number of contactless cards by 50% in the UK to 30 million this year, up from the nearly 20 million issued in 2010.
“But, as we all know, what really matters is not just the number of cards issued, but the actual transactions,” Bareisis adds.
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