A Look to Payment Processing in Europe

Written by Ross Sprague

Ross (right) and friend in front of the Lamb & Flag Pub in London.

There is an old adage in America that "Cash is King", but is that really the case in countries where Monarchs truly preside?

To take a look at future technology and trends in the payment industry, one can often refer to Europe as they have routinely been ahead of the curve compared to the United States.  EMV (chip card) acceptance is a prime example that was introduced in the late 80's with general acceptance in the 90's.  I recently hopped into my payments time travel device, also known as a Boeing 787-9 operated by Virgin Atlantic, to see the current state of the payments industry firsthand in the UK and the Netherlands.

To my surprise, Apple Pay and Contactless payments were everywhere!

Upon our arrival to the UK, my wife and I loaded our belongings into our Black Car for the hour plus drive from Heathrow airport to Shoreditch.  I lifted up my card to show the driver I was ready to pay at the end of the ride, but he quickly pointed to my phone and then towards the card reader and said, "Apple Pay is quicker." 

At the first bar we went to with our friends that we were visiting, my friend saw me open up my billfold to get my card and commented "Whoa, what is with all those Pounds in your wallet? Everywhere around here takes card, Apple Pay specifically" as he paid for a round of drinks.  Even down in the Tube riding the Underground, there was no need to calculate my trip on the Oyster Card machine (an homage to another form of payment during medieval London) – I simply used Apple Pay while going in and out of the Underground stalls and my fare was automatically charged to my card.  Now there were some merchants that would not accept my AMEX-loaded Apple Pay while in London, but when this was the case my Contactless United Explorer Visa card filled in quite nicely.  

If a merchant only accepted one form of payment it was usually 'Card Only.’  Whether it was a produce stand at Borough Market in London or the Holy Fried Chicken stand at the Foodhallen in Amsterdam, the likely and only form of payment accepted was via card.  I asked the vendor at the Holy Fried Chicken stand why they accepted card only and his response was "taking cash takes too much time… giving the change and having to wash my hands again… also when employees work there is less chance of theft. I also don't have to carry change or go to the bank for deposits."   

Do I think the Apple Pay/Contactless payments and Card Only trends will make their way across the pond to the US? The answer is an absolute “yes!”

One factor that could delay this from happening soon is the issue of tipping here in the US.  Businesses in Europe have moved towards automatically including gratuity in the form of a 10-15% Service Charge on your bill instead of a separate line item for written in tips.  When you pay with Apple Pay in Europe, there is no receipt to be signed and no need for a tip to be added then adjusted later before settlement like current operations function here in the US.

For businesses looking to cut down on theft and retain good employees while they grow their average ticket and overall sales, making a move to Card Only and Apple Pay/Contactless payments can help to achieve all three.  When merchants experience theft you first envision a customer wielding a finger gun inside of their coat pocket, but more times than not it is the employee behind the register that you are likely to experience theft from.  As the cost of living continues to rise, being able to retain well-trained employees is vital for businesses in the service industry.  A change to automatic gratuity or a built-in service charge can help ensure that your staff will be additionally compensated on top of their wages.  Exceptional service would then be left an additional tip in the form of cash.  Customers paying with cards are known to generate average tickets between 12-18% higher than cash which will help propel overall sales growth for the business.  All of these are positives for merchants looking to grow their businesses.

Nostalgic establishments here in the US often hold onto the mantra 'Cash is King' and remain cash only. Meanwhile, the Lamb and Flag Pub in London which was built in 1623 says "hold my ale", while the bartender points to the pin pad for payment.   As customers become more familiar with Apple Pay and Contactless payments, I expect to see more US businesses promoting card use and eliminating cash.