[Dave Birch] As my life is so dull, when I travel to interesting places I like to waste my time and the time of everyone around me by trying out any new payment schemes, terminals and form factors to hand. Thus, I went to San Francisco not with flowers in my hair but with an array of cards, phones and my splendid new PayPass watch. Which, I have to say, got us off to an excellent start! I used my watch to pay for the cab ride from the airport and it worked perfectly, as you can tell from the enthusiastic expression on the face of the driver, who was clearly hoping that we would carry out additional payment experiments.

Watch this! (Yuk Yuk)

Remember, I do this so you don’t have to.

Unfortunately, from then on, things went downhill a bit. Now, remember, the only reason that I am writing about this stuff is because I care about it. I spend a lot of time sitting in offices looking at Powerpoint and reports, but to me there’s no substitute for actually going to the retailers and finding out what is really happening with the contactless roll-out. For many of our clients, the use of mobiles at POS can’t come soon enough, but if the contactless rails aren’t there then the mobile train won’t run.

So… We went to CVS and Best Buy, none of which would accept any of our UK contactless cards: not Visa, MasterCard or Amex. Nor would they accept any other form factor (not my UK phone or my UK watch) and we did check the terminals were working because we paid with a US contactless card no problem. We asked the checkout clerk in Best Buy about the situation and were told that while some people did occasionally try and use contactless cards, they only worked some of the time. However, unprompted, he also ventured that some people have paid using Google Wallet on their phone and that seemed to work properly. (Indeed, a colleague used Google Wallet to pay in CVS and it worked fine when our cards didn’t). Hhmmmm…

We really need contactless to get on track, but I think we’re going to have a little bit of a problem unless we (i.e., the industry) buck up a bit. Back in dear old Blighty, where my younger son elicited an appropriate gasp of astonishment when paying in McDonalds using a watch, things are dragging somewhat.

On average, each of the approximately 60,000 contactless point-of-sale terminals in the United Kingdom is used only four to five times per month, said Matt Rowsell, chief commercial officer for Streamline, part of WorldPay, the United Kingdom’s largest merchant acquirer.

[From NFC Retailers Blog » UK Contactless to Reach a Tipping Point in 2011?]

I’m sure there are all sorts of reasons why consumers might be slow to start tapping — perhaps they have security concerns (unlike me), or don’t like to use a debit card at point of sale (like me) — but it may be that the simplest explanation is most likely correct. To wit, none of them know what it is.

With interviews from mote than 2,500 respondents online, the study reveals that just 12% of the British population believe they own a contactless card. However, the UK Cards Association reported that there were 19.6 million active cards in the month of November.

[From ContactlessNews | Report: Banks and retailers need to do more to increase use of contactless card technology]

I noticed this at a recent event in the US. I happened to be talking with a couple of American chaps and the subject wandered toward contactless acceptance, as it so often does at my lunch table. Both of them said they had no contactless cards. A little later on, as the discussion continued, wallets were produced and opened. One of them had contactless card from a well-known US issuer. I pointed this out. The chap said words to the effect of “I wondered what that symbol was”.

There are going to be a few changes soon. I am reliably informed that the contactless no-CVM limit of £15 will be raised soon (one of the things that retailers have been asking for) and that Olympic year will see renewed efforts.

In its second ‘contactless barometer’, the card giant quizzed 500 contactless users in the UK, 500 in Poland and 500 in Turkey. In the UK 73% agree or strongly agree that contactless technology will ultimately become more commonplace than cash, compared to 79% in both Poland and Turkey.

[From Finextra: UK contactless payments momentum gathers pace]

What this survey in fact shows, as do all the others, is that people who use contactless like it, but they’d rather have it in their phone. My suggestion, bearing in mind that I know virtually nothing about the acquiring business, is that a potential stratagem might be to locate contactless terminals at points of sale where cash is a pain (e.g., the car park by Blockbuster in Woking) instead of a points of sales where it isn’t (e.g., my dry cleaner).

To address what one might call a “flight risk,” MasterCard Inc. plans to test contactless payments at 30,000 feet, enabling airlines to accept more secure plastic — and potentially mobile — payments aboard planes.

[From Making Plane Sense of In-Flight Payment Risk – American Banker Article]

This is a fun idea, but it set me wondering why they bother with POS at all: they know your seat number, you had to prove your identity to get on, so for frequent fliers at least then they may as well just bill you. But that’s for a future blog post. Back at contactless POS, there are other niches where more effort might yield better dividends than in high-street retail. Events, stadiums, arenas and the like would be an obvious category.

From today, the world’s busiest arena, The O2, is rolling out contactless technology across more than 250 card payment terminals.

[From Barclays Media Centre]

They clearly had the contactless terminals up and running double quick (well done Barclaycard) because my boys went to watch the ATP Finals for a day and got some free tennis balls for paying for soda contactlessly (albeit with a prepaid MasterCard sticker on the back of an iPhone rather than a Barclays’ card!!).

Like father, like son.

These are personal opinions and should not be misunderstood as representing the opinions of
Consult Hyperion or any of its clients or suppliers


1 comment

  1. Yes! You’re so right!

    Maybe contactless is still parked in “Innovation” teams in all the banks and hence the Marketing departments are studiously ignoring it. Can anyone enlighten us as to how to get it moved to BAU?

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