How often does this happen: you have made a pit stop at your local supermarket to pick up, perhaps, a missing ingredient for the dinner you're cooking in a few hours, or a tube of the toothpaste you've run out of, or basic AA batteries for the television remote, but as you march on down to the checkout counters, you find that every last one of them comes attached with a long line of shoppers, all queuing to pay for the items in their carts. What would you do then? Would you stand in line, or would you abandon your potential purchase and walk right out the store? A recent whitepaper on ‘why customers leave' recorded that 70% shoppers will exit a store if they perceive the queue at a checkout counter to be ‘too long'. A third of all customers report they have abandoned a checkout line when forced to wait for more than five minutes in the line. And nearly half of all customers will actively avoid a retailer or a brand in the future if the wait in the line during a previous visit proved longer than five minutes. The real question is what can retail store owners do to fix this? Well, cut down on the length of the queues at their checkout counters, of course, but how? Simple: a contactless payment transaction lasts just over 12 seconds – that's twice as fast as an over-the-counter transaction – thereby reducing queues by up to 40%, not to mention scaling up the customer's perception of service provided. Oh, and as an added bonus, as per a MasterCard Advisory Study, consumers spend up to 30% more when paying via contactless cards, in comparison to traditional credit cards, owing to the lessened time frame of this payment method which does not require the use of a four digit pin entry at a retailer's till. So, clearly, both merchants and customers have reasons to embrace contactless cards. Meanwhile, for banks, the proliferation of contactless cards translates into increased revenue generation from previously untapped cash-based markets. This payment form also opens doors to lucrative commercial partnerships, scales up the value of the bank's portfolios and helps banks have their card become top-of-the-wallet, all without any changes to existing IT infrastructures. Plus, embracing contactless payment technology strengthens the innovative image of a bank. Contactless payments enter Saudi Arabia Cashless, contactless cards are one of the most powerful trends currently shaping the consumer environment in Saudi Arabia, where contactless infrastructure is fast being installed: a report from ABI Research predicts there will be 200,000 contactless payment terminals installed across the Kingdom of Saudi Arabia by the end of 2016, and this number will climb to 500,000 by the end of 2019. Meanwhile, quite recently, Riyad Bank as well as National Commercial Bank released contactless payment card in the Saudi market. Powered by Gemalto, those cards work like other Near-Field Communication (NFC) cards used in American and European markets. There is no need to swipe the card or insert it into the machine – one pass over the terminal, and the payment is accepted. If merchants, banks and customers, all are attracted to the appeal of contactless cards, why has it taken all this time for contactless payments to make it to the Saudi Arabian market, and the Middle East as a whole? Well, a contactless transaction ecosystem has been looming over the horizon for a long time now; the delay, experts claim, can be attributed to a simple case of the ‘you-first' syndrome, where merchants were reluctant to install contactless point-of-sale (POS) terminals unless banks deployed contactless cards, and banks were in no hurry to invest in contactless cards if merchants had no POS terminals to support them. But this year will bring with it fresh tidings: in 2015, a total of 21.7 million contactless cards were deployed in the MEA region according to ABI research report. In 2016, we should see the deployment of an additional 30.4 million contactless cards within the year according to the market analyst, putting the Compound Annual Growth Rate (CAGR) of contactless cards at over 45% in the region between 2013 and 2019. Additionally, in 2015, ABI Research counted 1 million POS contactless payment terminals in the Middle East & Africa region, with projections of 900,000 additional POS contactless terminals being installed by the end of 2016. With a CAGR of 48%, an impressive 4 million POS contactless payment terminals are expected to be deployed in the MEA region by the end of 2019. Saudi Arabia may have been a cash-based society up until now, but is geared for change: MasterCard's recent ‘Cashless Journey' study indicated that non-cash transactions in the country account for 19% already, and together Saudi Arabia and the UAE are leading the shift to non-cash payment forms, further spurred by consumer education and government initiatives. *The writer is Director, Banking Solutions & Services for Middle East & Africa at Gemalto
