McDonald’s UK Embraces Contactless, Adding Momentum to UK Rollout

Jan 21 2011

McDonald’s has announced it will accept contactless payment at its 1,200 restaurants throughout the United Kingdom, one of the first tier-one merchants to embrace the technology in the country.

McDonald’s UK said it will be ready to start accepting contactless payment cards by summer, after it finishes a general overhaul of its point-of-sale terminal system, implemented by IBM.

The move will offer needed momentum to the country’s rollout of contactless payment, launched in September 2007. The rollout is mainly progressing thanks to just one bank, Barclays and its credit card unit Barclaycard, which have funded most of the cards and terminals rolled out to date. Barclaycard is both an issuer and acquirer.

McDonald's was one of the first merchants to adopt contactless payment in the United States, agreeing more than five years ago to begin to roll it out nationwide. It received help from such card schemes as MasterCard Worldwide, which subsidized terminals.

McDonald’s UK works with another major acquirer in the United Kingdom, WorldPay. And the fast-food chain said it will launch contactless payment in the United Kingdom with the help of Visa Europe.

A McDonald’s UK spokesman told NFC Times the assistance from Visa will mainly come in the form of promotional support. He said the fact that Visa cut interchange rates for contactless debit transactions early last year was not the reason the chain is adopting contactless.

"It was about convenience and speed of service and bringing enough payment options," the spokesman told NFC Times. He noted the McDonald's locations are nationwide, not just in London, where contactless acceptance points are concentrated. McDonald's UK was the first major fast-food chain in the country to accept conventional payment cards, in 2007, he added.

There are just under 45,000 contactless point-of-sale terminals in place in the United Kingdom, according to Barclays. Most are in small merchant chains or single shops.

Last year, however, some larger merchants announced they would at least trial contactless payment, including Co-operative Food, which will launch a pilot this year at 100 of its grocery stores or supermarkets, leading to a possible rollout to the majority of its more than 2,500 stores nationwide in time for the 2012 Olympics in London.

A sister chain, the Co-operative Pharmacy, the UK’s third largest retail drugstore chain, said it would run a pilot early this year at 50 stores with hopes of expanding to more than 500 stores by March of 2011, then possibly the rest of the chain’s 800 stores. Update: Two much larger merchants, retail drugstore chain Boots and mega-supermarket chain Tesco have also expressed interest in contactless and are trialing the technology. Both are likely to roll it out. End update.

And Spar, the largest convenience store chain in the United Kingdom with 2,600 stores under its banner, began rolling out readers throughout the chain last summer. Spar’s merchant acquirer is also The Royal Bank of Scotland.

Roy Ford, retail IT controller and head of card strategy for Spar UK, earlier told NFC Times that lower interchange, on which merchant transaction fees are based, was the top reason Spar is rolling out contactless. The lower interchange will cut debit card fees by 40% when contactless is fully rolled out in the chain, Ford said.

Fees for accepting contactless or any open-loop payment cards is a major reason British merchants have given for holding back from accepting contactless.

But while Visa and MasterCard have both quietly lowered interchange, a rush by merchants to embrace contactless did not follow.

Visa nearly a year ago slashed its rate by half for contactless debit purchases between £2 (US$3.12) and £10, to a flat 4 pence (US 6.2 cents) per transaction. That is compared with a conventional EMV debit transaction with PIN of 8 pence. The Visa payWave debit rate is even less for transactions of £2 and below, though there is no break on interchange for contactless transactions between £10 and £15. MasterCard’s rate for Maestro debit is slightly lower than 4 pence. Rates for similar Debit MasterCard transactions are structured differently, but also are lower than conventional chip-and-PIN transactions.

HEADLINE NEWS

Apple to Enable Campus ID Cards in Wallet but Doesn’t Announce Opening of NFC Chip

NFC TIMES Exclusive Insight – Apple will enable colleges and universities to add NFC-based student ID cards to its Wallet with OS upgrades to its Apple Watch and iPhone, the tech giant announced Monday on the opening day of its Worldwide Developers Conference.

Barclays Embeds Contactless Chips in Bands for Brand-Name Watchmakers, Hoping to Boost Payments Wearables

NFC TIMES Exclusive Insight ­– The first contactless payments wearables resulting from UK-based Barclays partnerships with seven mostly analog watchmakers are beginning to roll out, with more planned–all using the bank’s bPay contactless chips and payments service.

Google Makes Progress Signing up Merchants in India for Tez Payments Service, but Penetration Still Low

NFC TIMES Exclusive – Google has signed up 640,000 small merchants in India to use its mobile payments service, Tez, a Google spokesman told NFC Times.

Vancouver’s TransLink Launches Open-Loop Ticketing, Though Offers Daily Riders Few Incentives to Tap Bank Cards to Pay

NFC TIMES Exclusive Insight – Vancouver is the latest major city to enable riders to tap to pay fares with contactless bank cards, including card credentials loaded into such NFC-enabled mobile payments services as Apple Pay, Google Pay and Samsung Pay.  

Walmart Quietly Ends Trial of App that Would Have Enabled Customers to Avoid Checkout Lanes in Supercenters

NFC TIMES Exclusive Insight – Walmart Inc. has ended a trial of its Mobile Express Scan & Go app in its Walmart stores in the U.S., which had enabled shoppers to scan their items themselves and pay with a stored credit or debit card, then leave the store, after having a greeter scan a bar code in their apps to briefly check the receipt.

Another Large Chinese City Supports QR Code-Based Transit Ticketing

NFC TIMES Exclusive Insight – Another major Chinese city is accepting QR code-based payments for transit fare collection, with riders of the Shenzhen Metro now able to use WeChat Pay to cover the fares.

Deutsche Bank Plans to Expand New Payments Service for Airlines to Other Industries, Though No Rollouts Yet Scheduled

NFC TIMES Exclusive Insight – Germany’s largest bank, which announced plans Monday to pilot a new payments system for airlines that would enable travelers to buy tickets without pulling out their credit or debit cards, is also planning to expand the scheme to other industries, a bank spokesman told NFC Times.

Apple Touts Strong Growth of Apple Pay Globally, though Again Fails to Release Actual Transaction Figures

NFC TIMES Exclusive Insight – Apple said the number of Apple Pay users doubled globally while transactions tripled during the last quarter, but the company did not release many details explaining reasons for the increases and again released no actual figures on Apple Pay usage.

Contactless Payments Continues to Grow for Transport for London, Helped by Fare Capping

NFC TIMES Exclusive Insight – Transport for London this week was again trumpeting its move to open-loop fare collection with contactless credit and debit cards and applications on NFC phones–noting that contactless payments now accounts for half of all pay-as-you-go metro and rail rides in and around the UK’s capital.

Visa and Mastercard Hope New Online Payments Spec Will Accelerate Rollout of Tokens; U.S. Merchant Group Blasts Network Move as Anticompetitive

Apr 26 2018

NFC TIMES Exclusive Insight – Major card networks Visa and Mastercard hope a new technical framework for online transactions they are backing from their jointly owned EMVCo specifications group will help them keep more transactions on their networks, amid growing competition for mobile and other digital payments and lackluster take-up of the networks’ respective online digital wallets, Visa Checkout and Masterpass.

Second Smartwatch Supports Fitbit Pay, but Payments Service Remains Fragmented

NFC TIMES Exclusive Insight – Struggling wearables maker Fitbit on Monday began selling its second smartwatch, the Fitbit Versa, supporting its NFC-enabled Fitbit Pay service, but not all versions of the new device support NFC in the U.S.