[Dave Birch] As part of my campaign to deliver first-hand reports on contactless use and interoperability, I went into a McDonald’s in the U.S. and bought a very delicious meal. The line was quite long, so I’m sure they appreciated my attempt to pay in 500 milliseconds using my spendid Barclays OnePulse card featuring the excellent PayWave interface. I have my OnePulse in an outside pocket of my wallet for optimal tap action when I’m going on the underground or buses in London. So here we go…

Yet another picture of a POS terminal

Unfortunately, it didn’t work. So I had to take the card out of my wallet and pull it through the stripe reader, the way that POS terminals used to work in the old days. How quaint. There’s a bit of a pattern emerging in my interoperability tests, I’m afraid. If I try to buy a contactless coffee in Singapore, no problem, in the U.S., no chance.

I don’t imagine that this lack of cross-border interoperability (in the U.S.) makes much difference to the overall roll-out. As has been discussed before, the U.S. environment has some particular characteristics (all terminals online, no EMV cards) that make the introduction of contactless of marginal utility at traditional retail POS. Were my contactless card to work in a New York taxi (it didn’t, but let’s pretend — nor did it work in the AMC Movie Theatre) then it wouldn’t be an EMV-protected offline transaction: it might take me 200 milliseconds to tap the reader, but I’d still have to wait while the terminal dials up, authorises and then prints out a receipt (agonisingly slowly). So why is anyone in the U.S. spending money on the technology? After all, there doesn’t seem to be a huge demand.

Wachovia’s Steve Boehm is taking the sensible man’s approach to contactless: wait and see if it takes off and get on the bandwagon when it does. Contactless–like smart cards–is unfortunately a technology in search of a business model to support it.

[From Wachovia: No Contactless at The Catalyst Code]

If the business model depends on speeding up POS transactions, it’s pretty thin in that environment. However, if the business model is about looking at a much bigger picture, making more of a play for the longer term, then it’s got more of a chance…

“Tap-and-go contactless payments will pave the way for cell phones and handheld computers to become ‘electronic wallets,’ packed with consumers’ payment and merchant cards, coupon offers, even medical records, family pictures and more,” said Javelin’s Founder and President, James Van Dyke. “But consumers won’t benefit until the primary players — card networks, financial institutions, mobile carriers, merchants and handset manufacturers — work together toward a unified, simple solution that lets everyone win.”

[From Studies look at NFC, contactless, ask, what’s the delay? : Contactless News]

This is what it’s all about. If the past is another country, so is the future. In this case, Japan. There, McDonalds has begun a new service, allowing customers to download a McDonald’s application to their phone. The application uses the contactless interface, so you order using a menu on your phone then wave the phone over the POS terminal: in one transaction, the order (and payment, either by DCMX credit card or e-cash) zips to the terminal and an e-receipt comes back. Cool. And to make things even better, McDonalds use the application to send coupons to the customer. But wait a moment…

“The food here’s as cheap as it gets anyway – why would I give out my phone information and risk junk mail from McDonald’s just to save a few yen once in a while?” she explained.

Anecdotal evidences says that receiving unwanted marketing emails after signing up by phone for discounts is fast becoming a problem, leading many Japanese to avoid technologies that lead to coupons, such as QR Codes.

[From McDonald’s serves Java with mobile phone menu | News | TechRadar UK]

So there’s a big play to be made about the integration of contactless payments with value-added services and mobile-delivered content, but it’s going to take a little more thought than pumping “traditional” coupons over the mobile channel.

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


  1. Dave,
    Unfortunatley your one Pulse card won’t work in the US because it doesn’t support the neccessary Magstripe Data mode. Perhaps this is another example of two nations divided by a common language.

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