[Jane Adams] Transport for London has put on ice its plans to use the Oyster card for low value non-transit payments for items such as coffees and newspapers, reports the London Evening Standard today. The plans were canned after TfL failed to reach agreement with a financial sector partner over terms. The Standard quotes Will Judge, project manager at TfL as saying that they were unable to agree on a system that would cost retailers less to accept than existing credit cards.

While no announcement was ever made about who the financial partner
was, TfL was known to have held discussions with both RBS and Barclays.

The story emphasises one point that often gets overlooked in
discussions of cash replacement – while banks and card associations
would dearly love to get cash out of the system, it doesn’t necessarily
benefit retailers to do so. Studies that have been carried out in
Belgium and the Netherlands show that for transactions of under
approximately €11, cash continues to be cheaper for society as a whole
than card systems unless you are talking about an existing e-purse
system such as Proton where most costs have already been written off.
That is existing in the sense that retailers are already using it,
rather than existing in the sense that it’s in use elsewhere but you
still have to install a whole load of terminals across a wide retailer
base.

Yet, Octopus extended its tentacles successfully in Hong Kong. What’s so different here (other than democracy clearly)?

3 comments

  1. But cash only seems cheaper to retailers since they don’t have to pay the full costs of it. Cash gets an unfair cross-subsidy. I’ll put together a post about this over the weeked.

  2. Given everything Oyster had going for it and it did not make it into cash, it shows what a tough job we had at Mondex.
    Mark (looking for positive strokes)

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