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Cashless in Southwark - but where is my watch?

20 March 2013 2 comments

Retired member

Around my office in Southwark there are now several locations where you can buy your lunch using contactless card technology. And the numbers of users seem to be growing borne out by this news from Pret A Manger that 20 percent of its overall transactions are contactless. And this is one situation where all the promised benefits have turned out to be true – it really is much faster and more convenient. When I bought my lunchtime sandwich yesterday the lady on the checkout commented how fast it was - “much quicker than cash”.

But of the dozen places to buy lunch close to the office, only three have got contactless technology. It just shows how slow it is to roll out any new payment mechanism nationwide. I remember all the loud announcements that the Olympics would be a driver to get contactless rolling out. Going further back there were articles about contactless having reached a ‘tipping point’ such as this one from 2010: https://www.finextra.com/news/fullstory.aspx?newsitemid=21970. I just don’t see any evidence of this.

To start with, of the cards in my wallet only one has been issued with contactless capability. And none of the others are due to be reissued before 2015. So one down side of the extended life cycle for the EMV cards is new capabilities don’t get issued to the population as whole.

Secondly I don’t think consumers have much awareness of the capability. There is now more advertising going on (especially the Barclays adverts) which hopefully will address that.

But more importantly, retailers are not suggesting that you use contactless. Surely they have a big interest in making this successful. Reducing the cash held in tills and speeding up checkout are important benefits for them. So training their staff to let customers know they could use contactless rather than fiddling with coins and notes would be the fastest way of growing this transaction base.

Once consumers are used to using cards in this way then they can be taken on the next step, whether that is using NFC on the mobile phone or NFC on something else such as the smart watch that is being predicted (http://blogs.ft.com/tech-blog/2013/02/apple-iwatch/) – that is one I would like.

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Comments: (5)

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

24 March 2013

With an outflow of 1.5-2% MDF / MSC for accepting cards - contactless or otherwise - and no tangible outflow for cash, it'd be a tough decision for the C-Suite of any retailer to direct their frontline staff to proactively move their customers away from cash. Not surprisingly, I've never come across a single retailer / merchant who has encouraged me to pay by card instead of cash. At most, we can expect a retailer to ask the customer who's anyway paying by card to select a contactless card instead of a non-contactless one since the former is convenient for both parties. Mobile wallets face an even tougher challenge: Despite the payer being physically present at the point of sale, transactions made with mobile wallets risk attracting the higher interchange applicable for Card Not Present transactions.

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A Finextra member

25 March 2013

Thanks for the feedback Ketharaman but I believe the C-suite person would understand the true cost to the business of taking cash.

And if they don't believe in replacing cash why are they investing in upgrading the card terminals to incorporate cardless capability when that capability is limited to transactions under £15?

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Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

25 March 2013

Upgrading regular contact terminals to contactless terminals has to do with expediting transactions that are anyway going to be done with cards. I don't see it as a tactic for shifting cash to cards. In any case, if I understand your post correctly, penetration of contactless terminals is only 20%, which is not much to write home about considering that the technology was introduced over 5 years ago.

If the C-Suite really thinks that cash is costly, why're retailers and merchants not clamoring for permission to levy surcharge on cash transactions?

While I don't deny that there are hidden costs of handling cash, they're part of fixed costs of doing business, unlike MDF / MSC which is a tangible cash outflow associated directly with accepting card payments.

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A Finextra member

25 March 2013

Good blog post: there are indeed many barriers to contactless mass adoption. Certainly the olympics tipping point hype was always just that.

I do think contactless may move more into the mainstream with London buses now accepting cards as well as Oyster. Cash payment for a bus fare has been excrutiating to say the least for any bus traveller. Contactless adoption is about making the action instinctive, and the Oyster readers are a natural platform for this.

It feels to me as if this contactless move has taken forever and as an advocate it has been frustrating. Perhaps some of the issues were ones you raise, or a faear of cannibalising Oyster?

I am sure that the corner shops will be the last to change: but at some point the benefit of a quicker purchase will influence choice and selection of outlet over product alone.

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A Finextra member

03 April 2013

No advance knowledge in my earlier bus comment but news here:

https://www.finextra.com/news/fullstory.aspx?newsitemid=24686

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