News & Views - Savantor

Contactless growth forecastes

Monday, 30 June 2008

If the APACS forecast that there will be five million contactless cards in circulation and 100,000 contactless merchant terminals in place by the end of this year is to be realized then we had better get a move on. There has been little communication outside of the London launch in September 2007, and apparently 88% of UK cardholders haven't even heard of contactless payment cards. The roll out needs an injection of new life so that people can get used to the technology and the financial services industry needs to dispel some popular myths around security and fraud.

Over three quarters of UK citizens fear the introduction of contactless payment systems will leave them exposed to fraud, according to a survey commissioned by life assistance firm CPP. The poll of 2200 people conducted by TickBox found 77% of respondents feel that the roll out of contactless payment cards will make it easier for criminals to spend money on lost and stolen cards. Nearly half of those surveyed fear contactless cards will lead to increased crime levels, with 34% concerned about fraudsters hacking into personal details.

However, there is some good news in that 49% of respondents believe the technology will result in shorter queues and the same percentage liked the idea of not carrying cash. Nearly a quarter (23%) of those polled also felt contactless cards gave them more control as they don't leave the cardholder's hands at the point-of-sale. With the credit crunch hitting people's pockets, 47% of those questioned were concerned about keeping an eye on their expenditure while 34% think they will actually spend more as a result of the added convenience and ease that these cards bring.

Allied to this, the adoption of NFC has also slowed due to integration and architecture challenges, such as lack of supporting infrastructure, technical standards, cooperation among value chain participants, and market misperceptions.

It may be that the credit crunch is distracting major players from investment in new technology to ‘concentrate on the knitting’ but if that is the case it can only be a temporary interruption. There may be too many companies involved in the NFC value chain, each with their own interest, roles and business models.

Now may be a good time for financial players to take a good look at internal efficiencies so that when the market recovers they are ready to take real advantage of the opportunities which will come with technologies such as contactless or NFC.

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