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« What will replace cash? | Main | Clear goals »

Impact of contactless

By Dave Birch posted Oct 24 2008 at 5:51 PM

[Dave Birch] The evidence coming back from the marketplace is that contactless does, in fact, have the predicted impact on transactions in the relevant retail categories. It speeds transactions and simultaneously delivers an increase in average transaction size. Interestingly, it seems that the use of open (ie, Visa/MasterCard) contactless delivers a transaction uplift over the closed stored-value cards used on many education, corporate and government campuses.

Greater success occurs with the complete replacement of aging stored value card systems, resulting in lifting cashless sales from less than 10 percent of total sales to an average of 38 percent with credit/debit cards;

[From Payments News: New Cashless Vending Research - September 11, 2008]

This, to me, reinforces the rather obvious link between contactless and prepaid: a contactless platform for a prepaid product would mean that the two were mutually reinforcing in the assault on cash for low-value transactions, because of the increase in convenience (at both levels) over conventional card products. A contactless offline transaction is the fastest possible to way to pay for something, faster even than getting coins out of your pocket and throwing them at the shopkeeper.

It looks as if contactless is getting some new energy. Barclays are just about to start a major UK advertising campaign (in the middle of the "X Factor", which is apparently a TV programme of some description) and another pilot is just about to begin in England, with RBS and Stagecoach (a transport operator). Contactless technology has even reached Guildford. My spies reported the appearance of a contactless payment terminal in a nearby Krispy Kreme, one of my all-time favourite shops. Since I am a fearless crusader for first had experience of new payment products, I leapt from my desk and went hotfoot to obtain a dozen assorted. When it came time to pay, I searched for the contactless reader, which was behind a pile of leaflets and waved my PayPass card with a great flourish. It didn't work. When I asked the assistant, she told me that the contactless terminal had never worked and she didn't know why. Her boss, however, while confirming that it had never worked, did at least know what it was supposed to do (she knew that it was for transactions under £10 and so forth) so that's a kind of progress I think.

As an aside, if any of you will be in Swindon (or Swindon-City-of-the-Future, as we call it) on Monday 17th of November, I'm going to be giving an evening talk on contactless and the contactless/mobile future of retail payments for the British Computer Society in a joint meeting with Wired West. If you want to come along (I imagine places are somewhat limited) you need to contact Jeremy Holt of Clark Holt Solicitors who is organising the event. He's jeremyh (at) clarkholt.com, by the way.

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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I agree on the obvious link between contactless and prepaid. However, the London launch / UK rollout directive that all contactless payments must be offline makes it very difficult to manage prepaid transactions. Actually, there's a bunch of other related issues around the offline only rule that are probably worthy of a wider debate (including interoperability of the schemes contactless products when tourists arrive for the 2012 Olympics).

Well now I'm really disappointed: not only am I not the best-informed commentator on payments, I'm not even the best-informed commentator on doughnuts or fish and chips, two of my favourite subjects!

The contactless reader in Krispy Kreme Guildford has been there for ages, in fact I believe since the beginning of the O2 external NFC trial last November. There's also a contactless reader in Seafare Fish & Chips in Burpham I believe.

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