Thursday, 8 July 2010

Contactless payments – just hype or the real deal

By Steve Beecroft

Regulars to this blog, our clients and my peers within the payments industry will know only too well how positive I am towards contactless technology. Having designed and implemented several contactless schemes including NFC I consider myself an advocate of this now fully emerged, technology.

However, like any professional I always look to deliver the the most appropriate guidance to our clients and sometimes that means recommending clients do not to adopt a particular technology. This is something we did through our sporting venues division 'Smart Stadia Ltd, when a football club from West Yorkshire asked for assistance in defining the best next steps in their modernisation project.

Do we regret doing this ...... NO, it was what the client needed but not necessarily what they wanted to hear but is was absolutely the right thing for them. That was back in March this year and I have since had a call from the clubs Chief Executive thanking me for our ethical approach and inviting Smart Stadia Ltd to lead the next phase of their modernisation project for multi-application season ticket. Even if we had not had that call we would still be very happy that we had given appropriate advice that was in the best interests of the client.

It is our unshakable belief that we all need a balanced view, with this in mind I attach below an article on

Research from Datamonitor, a market analyst firm, suggests that the much hyped contactless payment market may be a long way off from becoming the norm in the UK despite trials by various retailers.

The research* from the independent market analyst has revealed that despite the huge potential market open to contactless payments the economic downturn has delayed issuers other than Barclaycard from investing in the technology as they just haven’t been able to spend money on it. Meanwhile many retailers are not sure yet if contactless is worth the investment.

Gilles Ubaghs, financial analyst at Datamonitor said: “Retailers could likely find the cash if they were convinced it was worthwhile, but many don’t seem sure there is any real point. Essentially it is a catch 22 as many consumers aren’t interested in having a contactless payment card when there are still so few places to use it and retailers don’t want to install the technology as so few people have a card.”

However, Datamonitor does believe that there are promising long term signs that the technology could take off but it won’t be as soon as many analysts predict.

Mr Ubaghs continued “Although contactless payments have been around for nearly 10 years, Barclaycard and London’s Oyster travel card remain the only two high profile companies to offer contactless cards. Investment by other issuers is needed, not only in the technology itself but in educating consumers as well. Consumers will need to be convinced that it is worth their while to use the new technology”

“Importantly, for consumers to be sold on using contactless payments retailers and issuers will need to work together and as this is yet to happen on a large scale. It will be a good deal of time before we’re able to walk into any shop and buy a chocolate bar in the same way as London commuters tap their Oyster cards.”

For the original article click here

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