Why use contactless?

The results from the first couple of years of contactless payments use in the UK show that, as expected, contactless is being used as cash replacement for small transactions.

The average value of a contactless transaction is only £4.93.

[From Tap-and-go is on the move to a shop near you | Mail Online]

It’s not always used simply because of the convenience, as one commentator noted in the comments on this story:

I have swtiched to using the contactless payment method to purchase sandwiches at shops such as Pret A Manger and Eat mainly because I am fed up with them ofloading their fake pound coins on me in their change

[From Tap-and-go is on the move to a shop near you | Mail Online]

Bizarrely, I was thinking about this the other day. I parked in Derby, which is in the midlands and when I returned to the car the local council wanted to charge me £11.20. In some kind of hommage to Derby’s past, the machine didn’t take cards or mobile payments, so we were reduced to emptying out our pockets, rummaging in the glove compartment and searching the floor of the car for change. Fortunately, my fellows had plenty of pocket change. But when we started feeding it into the machine, four out of the ten £1 coins we had amassed were repeatedly rejected, presumably because they were fake. I’d never really thought that the avoidance of fake currency would be part of the retailer’s business case, but I need to revise my opinion!

But what is the business case? Is it just about payments? For some kinds of retailers, the convenience of contactless payments makes sense only when it is also part of some bigger model, generally involving value-added propositions such as loyalty. The was recognised by Bling Nation, when they decided to refocus on the loyalty side of things…

John Paul Coupa of Coupa Café has the system in all three of his northern California locations. “It gets used a lot,” says Coupa, “(even) more than American Express.” Coupa recently implemented the FanConnect system.

[From ContactlessNews | Contactless payment scheme enables loyalty via Facebook]

In Northern California, then, things look good. But on the other side of the country, on the apparently more conservative east cost, the results were quite different.

Other merchants have not enjoyed the same level of success. Charles Savas, president of Center Beverage in Stoneham, Mass., got rid of the system after just three months. “They were going to charge me $40 a month,” he says, “and I only had $35 in sales for the first three months.”

[From ContactlessNews | Contactless payment scheme enables loyalty via Facebook]

A mixed picture. But does any of this early experience matter? If contactless is important only as the rails for mobile to run on, then the early feedback from the contactless card deployments doesn’t really matter. It doesn’t tell us anything about the mobile future, does it?

These, and related topics, will be discussed at Contactless Cards and Mobile Payments in London on 20th and 21st June at the Kensington Hilton. I’m chairing the event on 21st and look forward to see you all there. And guess what? The utterly splendid people at SMi have given me a two-day delegate pass worth an astonishing ONE THOUSAND TWO HUNDRED AND NINETY NINE POUNDS to give away on this blog as a competition prize. So if you are going to be in London on those dates and you’d like to come along to learn more about the world of contactless, all you have to do is be the first person to respond to this post with the current maximum payment value for “no PIN” contactless payments in the UK.

In the traditional fashion, this competition is open to all except for employees of Consult Hyperion and members of my immediate family, is void where prohibited and has been designed to be carbon neutral. The prize must be claimed within three months. Oh, and no-one can win more than one of the Digital Money Blog prizes per calendar year.

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

Top and bottom

I just applied for yet another credit card, this time because I fancied a contactless Amex ExpressPay card to play with (I already have contactless Visa PayWave and contactless MC PayPass cards). When I read this…

MBNA today announced that the first American Express-branded, contactless credit cards in the UK will be issued for use by MBNA’s customers.

[From MBNA introduces contactless Amex card in UK]

…naturally I couldn’t resist applying. The online process was pretty painless, I have to say, and my card is apparently going to arrive in 5-7 business days. Excellent. American Express marketing has been a bit of a theme for me recently. A few days ago the morning’s junk mail included a new special offer from American Express. Now, my British Airways American Express card is my top of wallet card, for about the first four months of the year. That’s because it gives you BA miles — which are not much of an incentive — and a free BA companion ticket — which is a great incentive — once you have spent £10,000 in a year. But you can only have one. So like, I’m sure, many other who travel on business, l spend £10,000 on the BA Amex card to get the companion ticket and then I go back to using my “Middle-Class Maestro”: the John Lewis MasterCard that I pay off in full every month. This delivers an excellent 1% cashback in the form of John Lewis vouchers that are valid in Waitrose.

Anyway, I got some junk mail from Amex which says that if I go and register my Amex card at some website and then use it in eight different stores before the end of June then… sorry, I lost interest at this point and threw it into the recycling bin. It was only when I got home in the evening after a meeting with a card marketing specialist today that I determined to retrieve it and read it. As it transpires, the offer was that if I go and register my card at a particular web site and then I use it in eight of the stores listed in the leaflet before the end of June then I get a bonus 2,400 BA miles. But surely, I thought, their computer would have noticed that I stopped using the card as soon as I had the companion ticket. If BA miles were an incentive to me, then I’d still be using it, so clearly they are not. The bottom line is that I don’t understand card marketing and have absolutely no idea what the marketing people are thinking about when they come up with their special promotions. For example…

KFC outlets have been promoting the cards, ranging in value from $10 to $500 and to be used within 12 months, as a “thoughtful gift idea for any occasion”… Preventative Health Taskforce chair Professor Rob Moodie said he was shocked when he learned about KFC’s latest marketing ploy. “It’s marketing gone berserk,” he said.

[From Fury over $500 KFC gift cards as nation battles obesity crisis | News.com.au]

Personally, I think that marketing may well have started off beserk, but I get his point.

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

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