UK businesses know that now, more than ever, getting ahead of the competition is crucial – as inflation, the cost-of-living crunch and geopolitical turbulence have created a tough operating environment. Having the right payments offering can help companies achieve a competitive advantage, but with a fast-changing technological landscape, where should they focus their efforts?

New research by Barclaycard Payments and FT Longitude, surveying 500 senior UK business leaders, underlines the importance of payments infrastructures to commercial success. The results show that 28% of firms have recently lost important customers because their payment experience was not as good as it could have been, while more than a third (34%) admit their payment processes are not as strong as they need to be to ensure agility in a time of economic uncertainty. 

Alongside this, the research also makes clear how important contactless is in the payments mix - with 51% of business decisionmakers predicting it will become the most important payment method for their customers in the next two years.

According to separate Barclays transactional data, the total value of contactless payments has already soared – by a substantial 49.7% in 2022, a year in which a record 91.2% of all eligible card transactions were made using contactless technology. These are both signs that consumers and businesses are continuing to shift to next-generation technology when buying and selling.

Yet, what are the reasons for contactless’ rapid rise in popularity and what are the ramifications for the wider payments ecosystem?

The higher £100 limit, introduced at the end of 2021, really made its mark as shoppers flooded back to high streets following the easing of coronavirus restrictions, leading to a surge in transactions. Brits have also become more comfortable making higher-value contactless payments from their mobile devices, with these transactions accounting for an even greater share of total contactless spend.

The Barclays transactional data also revealed that the average contactless user made 220 ‘touch and go’ payments last year, up from 180 in 2021, with the average value per transaction rising 18.5% to £15.13. Even when comparing 2022 against the contactless transactions made at the end of 2021, after the higher £100 limit had been introduced, transaction values were still 5.3% up on 2021’s figures.

The adoption of contactless payments has also transcended age boundaries. For the second year in a row, Barclays data revealed that users over the age of  65 witnessed the fastest growth in contactless usage, with a notable 3.8% increase.

Thanks to improvements in mobile technology, it is hard to see another payment method competing with contactless when it comes to both speed and ease,as 2022 also saw rapid growth in the value of mobile wallet contactless payments over the £100 card limit. These payments accounted for 4.1% of the total value of all contactless transactions last year, compared to 3% the previous year.

This data demonstrates the vital role the payment experience plays in encouraging customer loyalty and creating a seamless process. Barclaycard Payments and FT Longitude’s research echoes this – senior decisionmakers are keenly aware that payment transformation enhances customer experience, and for 4 in 10 (42%) business leaders polled, payments efficiency has never been a higher business priority than it is today.

With the above in mind, there are a few important things businesses should consider when trying to offer the best payment experience possible:

1. Personalisation is fundamental to success

Customers prioritise personalisation as the most valuable aspect of their online payment experience, which can involve features such as storing customer information for quicker checkouts, remembering their preferred payment method, and providing tailored purchase suggestions or discount offers.

2. Data analysis pays off

Our research suggests that businesses want to use their payments insights more effectively. The respondents told us that, when they choose a payments partner, their priorities are transparency, reliability, and accuracy of data (49% list this as a top factor), and the ability to combine data sources (46%).

3. Invest in tools that make payments easier for customers – or risk losing them

As regulations continue to tighten, the need to prioritise payment strategy will only increase in order to ensure compliance. By leveraging exemptions in the regulation through highly sophisticated fraud checks and artificial intelligence, the technology can also be added to an existing payment gateway and enable businesses to reduce the risk of abandoned baskets.

As businesses consider their next investment in payments technology and strive to provide a seamless shopping experience to their customers, our research shows that contactless really could mean more for commercial growth.