In early February 2015, shoppers on London’s Marylebone High Street will have noticed a scientist waving at them from a shop window. Anyone who responded to the lab coat-wearing figure’s call for attention was invited to hold their bank card briefly against the glass, resulting in a £2 donation being made to Cancer Research UK. Transaction completed, the scientist turned away, returning to his or her life-saving work.
Contactless payments were first introduced in the UK nearly 10 years ago. Recently, adoption has skyrocketed. According to the UK Cards Association, by June 2016 there were more than 92 million contactless cards in use, an increase of over a third since the year before. That month, nearly £1.9 billion was spent using contactless cards. They now account for one in every seven transactions.
Despite this, contactless technology has struggled to find a home in the charity sector. That’s about to change. Since the Cancer Research pilot at four stores last year, an increasing number of charities have been testing the technology. There are challenges - contactless collection is both more costly and complicated than shaking a coin bucket. But there are also many reasons in favour of making the change, not least that fewer people are carrying cash than ever before.
In October 2014, a meeting was held at the Charities Aid Foundation (CAF) to discuss new ways of fundraising. The concept of contactless donations was raised. Chris Allwood, head of product development at CAF, took the idea to Dr. Steve Perry, a director at CAF Bank. “He was so excited about it,” recalls Allwood. “He thought it was a really great idea.” Perry was also a member of the leadership team at Visa Europe. A pilot project was set up to test the appetite for contactless giving, with CAF working alongside Visa and Save the Children.
Donation terminals were installed in locations including a Costa Coffee outlet, Canary Wharf tube station, Westfield London shopping centre, and a music concert in Manchester. At the concert, when donors were offered a choice between contactless and cash, less than 1% of the money raised was by card. Elsewhere, contactless demonstrated much more potential. At Westfield, 30% of donors opted for contactless giving. At Costa, one in five people who paid by contactless card went on to make a donation.
Announcing the results, CAF declared the technology had “huge potential to transform fundraising.” Allwood said: “It’s vital we are at the forefront of this technology so that charities do not lose out.” Since then, Allwood has received weekly enquiries from charities interested in exploring contactless donations. Those to have trialled the technology include Comic Relief and the Barbican.
There are still barriers to widespread adoption. One is the cost involved. Several pilots have used a service involving three companies: Netherlands-based Payter, which supplies the terminal, plus payment provider Creditcall and merchant bank Elavon. PayPal also offers a card reader which can be plugged into a smartphone to accept payments. Both options involve an upfront cost for the hardware and subsequent fees for processing transactions.
Remco Willemse, managing director at Payter, estimates the initial cost at between £350 and £550. He recognises charities will need to carefully assess the business case. “If they buy a £2 bucket, it’s fine if they don’t do anything with it for 51 weeks a year,” he says. “With a payment terminal, there’s cost involved, a contract with the bank, and transaction fees apply. The great thing is, you don’t have to empty it, it can’t get stolen, you get the donations in the next day.”
Contactless donations have also thrown up challenges for the financial industry. In a face-to-face setting, Visa only allows contactless payments to be accepted alongside chip and PIN payments, creating problems for charities which don’t want or need the extra complication of chip and PIN. To date, Visa has offered waivers on a case-by-case basis. Willemse isn’t too worried: “Innovation or disruption within the financial world, which has so many rules and regulations, takes time.”
Despite these hurdles, there is a sense among contactless technology providers that a shift is taking place. Liz Gibson, head of payment services at Creditcall, says: “We’re seeing a steady increase in enquiries. It’s gone from being one-offs to being something that people want as standard.” Gibson recognises that appeal among charities will vary. “But contactless is increasingly prevalent and we’ll see the business case and use case increase as time goes on.”
Much of the focus to date has been on making the process simple. Cancer Research invested in written and video tutorials to ensure staff and volunteers were well versed in the technology. Payter adapted terminals from those used in vending machines, and chose a fixed donation amount. “Most of the time, having a fixed amount makes it straightforward,” says Willemse. In the future, Payter will enable charities to offer a small number of possible donations. “The less choice the better because we have so many choices to make already!”
Innovative tactics have been used to introduce donors to contactless giving. In May, Blue Cross used ‘Tap Dogs’ wearing jackets embedded with PayPal contactless readers to accept donations. Bas Gevaert, director of PayPal Here UK, says: “We are just at the very start of seeing charities develop unusual or unexpected ways of using contactless to raise donations.”
In April this year, contactless donation points appeared in five cafes in London and Oxfordshire. The Lunchbox terminal allowed customers to donate 30p to Mary’s Meals, a charity feeding schoolchildren in the developing world, meaning donors could buy someone else’s lunch at the same time as buying their own. James Wood heads up Earnest Labs, a creative agency which created the concept. “We know if you have an idea behind something, make it really simple so people can understand and it’s contextual, it will work a lot better,” he says.
By September, the boxes had received more than 3,000 taps, raising just under £1,000 and paying for 15,000 meals. Earnest is now rolling out the concept more widely and is setting up a charity to oversee the scheme and distribute the funds raised. There are other ideas such as Bookbox, where boxes would be installed in bookshops to raise money for reading charities. “The point is to always keep it contextual,” says Wood.
A number of major charities are working together to discuss contactless possibilities. One forum includes Cancer Research UK, Save The Children, Comic Relief, Sue Ryder, DEC, Great Ormond Street Hospital, WWF, National Gallery, Oxfam, and the Barbican working alongside the UK Cards Association. By the end of the year, a ‘contactless framework’ will be published to set out the opportunities and challenges presented by the technology.
There are also plans to bring down the cost for charities which don’t need contactless technology all year round. Vanessa Neal, senior product manager at Elavon, says: “We’re aware that charities don’t do face-to-face collections all the time.” Elavon plans to acquire a bank of donation terminals which it will hire out to charities on a short-term basis. “We want to make sure this is cost effective for charities to do collections in a different way.”
Since its pilot at the start of last year, Cancer Research has continued to experiment with contactless technology. On World Cancer Day this year, the charity sent out volunteers armed with contactless donation terminals to 16 locations across the UK.
Paul Weaver, digital innovation manager at Cancer Research UK, is closely involved in working to help drive adoption of contactless technology. He believes the main challenge will be to raise public awareness of contactless giving. Once that’s achieved, he sees serious potential. He points to examples such as regular giving and text donations, where technology has changed fundraising in the past.
“In my opinion, contactless is the next one of those,” he says. “It’s that big.”
Mark Wilding is a freelance journalist