Contactless has always been positioned on one single merchant benefit: speed. So waiving the signature for transactions under $25 just kills contactless.[From Waiving signatures for small purchases torpedoes contactless]
This is true to some extent. But it’s really only true in the U.S., where all transactions are online, and in comparison to similar card transactions. In chip environments, an offline chip-based transaction is going to take a couple of hundred milliseconds. Contactless is very fast, remember, partly because of the technology’s heritage in the transit world, where it is turning full circle: transit companies don’t really want to run ticketing operations at all, so they would be more than happy to have “pay at gate” where bank and other payment cards are used to enter/exit the transit system. This is why pilots and trials in this direction are useful indicators of the way the payment environment might develop. For example,
MasterCard is teaming with The Port Authority of New York and New Jersey and NJ Transit for the eight month trial, which is set to kick off in early 2009. Customers will be able to pay fares on buses and trains between New York City and New Jersey by tapping their contactless device at turnstiles and on fare boxes.[From Finextra: NY commuters to trial contactless payments on buses and trains]
In the non-transit environment, or I should say non-“closed” environment, the only way to get 200ms transactions is to go offline. But even then, while you’re standing around waiting 10 minutes for your latte, 200ms may be neither here nor there! So in most markets (ie, markets where not all the transactions are online), contactless products will run adequately fast and are a better option than no-signature stripe cards because of the improved security.
There’s a lot of this activity — contactless, transit — in London at the moment. The place has got everything going for it as the perfect test-bed for these kinds of ideas. The transit system is already contactless and the Oyster cards are widely used, so that means that customers are already familiar with tap ‘n go payments, the mobile market is competitive and the population density is high. But that’s not all. What’s just around the corner is the Olympics:
Lloyds TSB has started a multimillion-pound contactless card payments trial in London, ahead of plans to create a totally cash-free environment for the 2012 Olympics. Customers participating in the pilot will be able to hold the card up to a reader to take money out of cash machines or make purchases worth less than £10. The technology will be rolled out across the UK this summer. In 2012, spectators and participants at the London Olympics will be issued with the cards to handle everything from taxi bills and stadium access, to purchasing food and drinks inside the venues.[From Contactless cards trial begins – 14 Feb 2008 – Computing]
Now, this may be an outdated vision by 2012 because it still focuses on the card as the central consumer device. It may be, however, that by 2012 the mobile phone will already have taken over. I’m not the only thinking this, by the way.
Now the industry is betting that proximity payments will be their future, and if they’re wrong there’ll be a lot of empty space here in Barcelona come 2009.[From The future of the SIM hangs by a single wire | The Register]
Wouldn’t it be a dream if the public could use their phones to book tickets, enter the events, travel on the Underground and buy a coffee just using their phone. What a showcase!
These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]