Who do you listen to?

[Dave Birch] There have been quite a few stories around this week about American Express’ decision to drop its contactless keyfob as an optional companion for the cards with ExpressPay in the U.S. American Express understand their customers very well, and so its decision must represent a clear mandate from customers. It made me wonder how organisations in the payment space can go about getting a clearer picture of what customer want, since obviously some American Express customer must have — in some early pilot, or test market, or focus group — said that they liked the keyfob otherwise it would never have been launched in the first place.

Yet there’s a problem here because consumers are naturally very conservative about money and therefore find it difficult to imagine or articulate new ways of handling it. I well remember focus groups for a smart card product I worked on many years ago: consumers swore up and down that the pre-paid product needed a PIN to lock and unlock it. This was duly implemented (at great expense) but in practice they never, ever used it. So asking customers what they want can’t be the best way forward. Perhaps the best option is simply to give them new stuff to play with, so they don’t have to imagine it, and then be assiduous about gathering the feedback. There doesn’t seem to be any substitute for having an actual trial and listening to customers.

But wait a minute. As Dave Petch reminded me yesterday, it was less than a year ago that we were reading that

Bank of America began its own, low-profile, NFC trial late last year as part of a larger 5,000-employee pilot held at one of its corporate campuses, in Delaware, home of its MBNA division. But the NFC portion of the trial flopped for a variety of reasons… The bank gave employees a choice of the contactless form factors they could use and employees chose key fobs to phones by a six-to-one ratio…

“Active fob users averaged three times more transactions than phone users… One of the problems they had with the phone, you can’t do more than one thing at a time; you can’t talk and pay.”

[From The Mobile Payments Café: Contactless Technology in the US – Card Technology]

Now, in my course at the Visa Business School I’ve said for several years that the keyfob looked reasonable in the U.S. market — because I could imagine running into Starbucks with my car keys in the my hand to grab a quick coffee and paying with the fob — but that I couldn’t see it taking off in European markets because (and I know personal anecdotes don’t make for strategy) I have never, ever, walked around London, Paris, Brussels or, indeed, anywhere else with my car keys in my hand. So I was wrong about the U.S. market too, but what’s the big picture here? Does Amex move tell us anything about market direction?

I suspect that the big picture is that the Amex decision doesn’t really matter one way or the other. It’s early days and who knows whether consumers would prefer watches, hat, badges, keyfobs or novelty moustaches with contactless payment capability so it was perfectly reasonable to try out a few ideas. And I’ll say one thing for the Amex keyfob: it was well-designed, using alias PANs to prevent fraud. So my overall advice remains unchanged. There’s only one new form factor that can replace the card for the average consumers, and I think you all know already what it is.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]