News & Views - Savantor

Do we want contactless?

Friday, 30 July 2010

According to a survey carried out by the MyVoucherCodes, 72% of respondents have shown receptiveness to the idea of NFC technology being introduced in all supermarket stores.  The main reason behind such a preference is the belief that the shopping experience will become easier. In addition, 88% of participants have claimed that contactless payments method was “a good idea” whereas 37% of respondents thought the technology was “overdue”.  Coincidentally Co-operative Food has just unveiled plans to launch a 100 store pilot in 2011 for contactless payments supported by Barclaycard.  So if this all looks good for contactless where are the cards and terminals?  A recent estimate indicated that around 2% of UK POS terminals and 5% of UK payment cards now have contactless technology, with virtually all of these cards issued by the Barclays Group.

What is stopping the roll out?  The retail business case for investment in contactless technology is not strong given that the cost of a cash transaction is lower than that for a payment card purchase, and with an ATV of £4.30 in the UK the business case for a retailer is dependent upon the MSC it is charged for a contactless transaction.  Other issuers don’t yet appear to be following Barclays’ lead in big numbers possibly because they are waiting to see what happens with the cards issued so far or maybe because they still can’t see the business case.  So we are still a long way from delivering what the public apparently want now that they are aware of contactless thanks mostly to the roller coaster ads.  Thr danger is that contactless loses out to other forms of mobile payment like SMS which is becoming more popular.  Retailers are likely to wait and see before making their investment in new terminals.  Who is going to blink first?

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