09 Apr 2009
Plans for a widespread system for cashless payments to be in place in time for the 2012 Olympic Games are likely to be thwarted by retailers’ hesitation in adopting the necessary technology.
Under the plans, large areas of the UK, including the Olympics site in east London, would become cashless environments where contactless technology allows consumers to simply hold up cards to a reader to buy goods and services without the need to enter a PIN code.
But contactless payments will only take off if major retailers embrace the concept, said Sandra Alzetta, senior vice president for consumer market development at Visa Europe.
“Consumers love contactless, but we need the buy-in of the big high-street retailers to move this forward. We are starting to build up numbers, but mainly within smaller businesses, such as coffee chains,” she told delegates at the Digital Money Forum in London last week.
Many banks are already working on contactless card offerings. Barclays is providing suitable cards to up to three million customers this year and expects the majority of its clients will have received them by 2011.
And because of the success of the Oyster card for transport ticketing, London is the best place to launch contactless initiatives, according to Will Judge, head of future ticketing at Transport for London (TfL).
“We have trained this city to be contactless-ready. All you need to say to a Londoner is: ‘It is like Oyster’,” he said.
Judge said that one of the problems with contactless cards is foreign visitors’ unfamiliarity with the concept, so TfL is looking at the possibility of accepting global, interoperable technology, such as Mastercard's PayPass or Visa's PayWave on Oyster by 2012, to improve the way the capital serves tourists.
“Whether it is Oyster, PayPass, PayWave or another standard remains to be seen, but there is every possibility that London will host the first contactless Olympic Games,” he said.
But unless large retailers adopt terminals to support contactless payments, the entire proposition will be undermined, said payments expert Dave Birch, a director at supplier Consult Hyperion.
“Another problem is that currently, contactless terminals are in the wrong places. Adding the technology where you can already make card payments is great, but contactless needs to be introduced where cash payments are a nuisance – vending machines, for example,” he said.
Mobile payment technology has also been overlooked by retailers, said Birch, but value-added services such as loyalty schemes, discount vouchers and special offers could bring a much-needed sales uplift.
“Whereas contactless technology is about cash replacement, mobiles can offer a lot more than that; this is what retailers need to realise,” he said.
Contactless payment systems work well within closed environments where turning over customers quickly is a high priority, such as on the London Underground or at sports arenas. The model is therefore likely to work within the 2012 campus, where coffee shops, sandwich bars, food halls, t-shirts and memorabilia retail outlets will operate within one enclosed area.
However, it is questionable whether contactless will deliver a long-term return on investment for all retailers. For those whose sales process is longer, such as fashion and department stores where there are security tags to remove and coat hangers to sort, saving a few seconds at the till will make little difference to the overall customer experience.
At Clarity Commerce, we find retailers using their budgets to invest in technology to help drive sales revenue and secure a larger share of the decreasing consumer pound. Chargeable Stored Value and eGift Card mechanisms, used as loyalty systems to bring customers back to their stores time and again, is higher on their agenda. Plus in an ever "ROI focused" environment, these magnetic strip initiatives can be integrated with virtually any existing point-of-sale system, offering better bounce-back in consumer traffic with a much lower upfront investment.
In the future, I see the most exciting change on the horizon being when mobile phones are adopted as a fast swipe and pay mechanism so customers don't need to carry a card at all.
Posted by: Simon Towner, Clarity Commerce 16 Apr 2009
Revelation 13:16-20 (King James Version)
16And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads:
17And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.
Posted by: SAM 09 Apr 2009
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