Pay, But Don’t Touch
By Bernice Hurst, Contributing Editor, RetailWire
Toll roads used them first.
Buy a card, stick it in your car window and whizz right past the tollbooths.
Traffic kept moving and having the right change didn’t
matter. Other uses for contactless cards have been suggested but have not yet
become widespread. This may be about to change.
The Guardian reports that millions of people in Britain have been receiving
debit and credit cards over the past few months with a “wave” symbol
that will allow them “to pay for low-value items such as their morning
coffee or lunchtime sandwiches by simply waving their plastic over a reader
at the till.”
So far, the cards have been used mainly in coffee shops
in and around London but several large retail chains — including Tesco,
the Co-op, Boots, IKEA, Spar, National Trust gift shops and Little Chef restaurants
— are either running trials or, in some cases, rolling them out nationally.
Others, such as Sainsburys and Waitrose, are still thinking it over. The paper
also mentions “buses
in Liverpool and black cabs in London, while several U.K. music festivals are
expected to go cashless next summer,” leading to the 2012 Olympics becoming
“a contactless event” where visitors will be able to use their new plastic
to pay for transport, tickets and refreshments.
Evan Schuman of storefrontbacktalk.com told RetailWire contactless
payment trials in the U.S. have not been entirely successful.
Security is a
big issue in both countries, although different approaches have been taken.
In the U.K., retailers enter the amount due before the card is held in front
of the reader for consumer approval. Distance is limited and controlled.
In
early American experiments, customers displayed barcodes on their phones. According
to storefontbacktalk.com, newer technology involves a middleman
which “means retailers don’t need new barcode-reading hardware … customers
never show retailers their account information, so it can’t be stored — or
stolen.” Instead, consumers use (surprise, surprise) an app, registering
their bank account with its designer, Cimbal, who pays retailers when customers
scan the retailer’s barcode and key in a PIN. Did someone mention time-saving?
Discussion Questions: What are the pros and cons of contactless cards for
retailers as well as consumers? What hurdles do you see toward further adoption?
[Author’s commentary] Evan Schuman has reservations, which I share, about
who will bear the cost of using contactless cards. Are the very few minutes
possibly saved waiting in line to pay worth a possible increase in the price
of what customers want to buy? Most of us know that fees incurred by retailers
somehow manage to find their way onto product prices. Whether it’s for
card readers or middlemen, somewhere along the line, someone is making money
by charging for their services.
I view contact-less cards as a very brief technological stepping stone to all payment being conducted via handheld devices. If the trend even lasts 3 years I’d be amazed.
Time saving? Yes. Secure? Maybe. Contactless cards are a great idea. They just need to be made secure. And will consumers want to carry yet another card in their wallets when similar apps are already available their mobile phones? With mobile penetration being so high, it would seem that the phone would have the edge in consumer acceptance.
E-Z Pass and smart keys have become ubiquitous. Debit cards are, in large part, replacing credit cards at checkout. Sure, there are still concerns about security and who underwrites the cost, but like most new technologies, this technology offers improved throughput efficiency and will surely grow. If you doubt it, try to remember the last time you saw anyone purchase something with a check in a retail environment.
Event tickets, boarding passes, etc, make a lot of sense because you are purchasing an item that can remain digital. Paper and printing are eliminated. For multiple product purchases (GM/Grocery) the issue is not so much contact-less as time at register to scan the products. If, and until, there is the elimination of scanning at the register, I don’t see contact-less providing much value in the retailers with several items in a typical market basket.
This is just a stepping stone in the pathway to a more automated hiring system. For now, when all is said and done, the smart phone at least for the next couple of years is going to come out the winner.
Just like my paperless smart phone boarding pass has replaced my airline boarding pass.
I agree with many of the other comments which seem to indicate contactless payment is a technology (solution) looking for a problem. EXCEPT: We really need to think about the promotion side of having a contactless ID on every customer walking through the front door. Suppose I can read the person’s ID at the doorway, get their cell phone number from their registration record, and send them targeted coupons as they enter the store? Better yet, why not have a retailer phone app that lets the customer register their phone number? Then the GEO locator can detect when they enter an affiliated retailer and a separate ID is not even necessary.
Contactless payments are no big deal but the customer promotions may be priceless.
Two issues will have to be resolved before widespread usage emerges. First is the security issue. Second, what about accidental swipes? Convenience will need to be balanced with how secure the cards are and how likely it might be for accidental purchases.
It’s important to point out that some new smartphone payment solutions are an order of magnitude more secure than current methodologies. (Full disclosure: our company offers products in this field.)
Why? 1. Because they are all software which can be updated regularly. You can’t do that with a plastic card or NFC chip. 2. They are centralized. To process a payment with our solution, for example, the provider receives two, 1-way communication calls — one from the POS/shopping cart; a second from the consumer device. With its security protocols in both places, including transaction details, GPS, etc. all elements must match making fraud (virtually) impossible. 3. Both parties must confirm each other’s identity. The work flow is the same using a plastic card, the difference is that the merchants logo appears on the consumer device for approval and the cashier sees the consumers photo to approve the transaction.
There is also the added benefit of including location based services for offers and consumer registered information for increased targeting.