The year of the contactless card?

A NatWest leaflet arrives in the post. "It's time for a change. Don't let cash slow you down," it says. The leaflet folds out into a snazzy contactless promo. There's no need for cash and it takes less than a second to pay (erm, hang on a minute, are you sure about that?)

The contactless camp are making much of the fact that, thanks to the sterling work of Visa, the London Olympics will be a cash free event. And on the back of that, contactless will finally take off in the UK and be embraced by retailers and consumers. Certainly, it has been given a boost by Transport for London's announcement that users of London's buses will be able to touch and pay in time for the start of the Games. The system will also this year be rolled out to the tube, Docklands Light Railway and overground network.

But let's face facts, in the context of the global cards and payments industry, the London Olympics is little more than a blip. It's a small sporting occasion being held in east London. One that will hopefully generate some good PR, but ultimately a niche event which will matter little in the grand scheme of things.

The NatWest leaflet also tells me that I can use my card to get instant coffee and fast food. McDonald's is one of the few retailers to have truly embraced contactless. Last year, it rolled the system out in all of its 1,200 UK stores. I'm reliably informed that it currently accounts for around 50 per cent of transactions in this country. Which sounds about right. Not enough retailers are getting onboard and many of those with terminals installed don't seem that interested. We've all been in an EAT or Pret and seen a queue of people waiting to pay with cash or debit/credit cards, whilst the contactless terminal sits there ignored and unloved. Or in the case of an EAT regularly frequented by your's truly, upside down and broken.

The banks should also shoulder some of the blame. Barclays/Barclaycard has lead the way in this area – almost all its credit and debit cards are now contactless – but others have been less keen. However, after a slow start I think the banks are now doing a good job in promoting this technology to their customers and in working with other parties to get it into the mainstream. Royal Bank of Scotland, for instance, is looking to increase the number of contactless debit and credit cards in issue during 2012, with an initial focus on London and the south east (hence the NatWest leaflet). 

The prospects for contactless have improved markedly in the last year but there is still some way to go before the 'no need for cash' boast becomes a reality. The Olympics will come and go but the same old issues will remain - poor user experiences, lack of consumer awareness, retailer apathy and the fact that many people still like and trust cash. In all likelihood, it will take the arrival of NFC-based mobile payments to make the contactless dream fly. 

Spreading the word

During my obligatory mid-morning Facebook log in (I can't possibly wait until lunch, I need to know what my friends have been up to), I came across a Visa sponsored link which took me here.

Pretty cool page, I must say - lots of useful info such as a map showing the contactless retailers closest to you. I blogged last week about an FStech contactless and mobile payments roundtable. One of the key messages to come out of the roundtable was that the industry as a whole needs to look at how it deals with messaging at various levels because at the moment it is all over the place. So it's good to see Visa attempting to connect with millions of Facebook users in a clear and concise way.

I still think that in many ways contactless is a solution looking for a problem, a problem that many people just don't have. Ultimately, cash works very well for them. But I will leave that 'rant' for another day.

Upwardly mobile

Just going through my notes from last night's FStech roundtable (sponsored by Elavon) which covered contactless and mobile payments.

Thanks to Wil Cunningham of Lloyds Banking Group for chairing and to the attendees who contributed to what was an interesting, lively debate. I'll run an indepth review of the roundtable in the next issue of FStech, but for now here are some of the stand out comments:

When it comes to contactless, it's like someone has built a Ferrari but the roads are full of potholes.

There are real positives. Look at McDonald's - they rolled out contactless in a matter of weeks. They have a compelling contactless proposition.

The industry needs to look at how it deals with messaging at different levels. The idea that cash is dead is utter nonsense. The cards and payments industry does itself no favours by claiming otherwise. Cash will be with us for many years to come.

With the rise of Facebook, Google and Apple and NFC-enabled phones, are we approaching the stage where we say, why do we even need a bank account? We can make the switch from bank to cell phone provider.

This discussion brings up an interesting scenario. With the exception of the two ladies at the end of the table (NB: Sonia and Emma, FStech sales ladies), we are a bunch of boring old farts. We're talking about email but it is so last century. Young people are not even having this debate, they are on Facebook and so on and they are communicating and looking out for one another on a whole different level to us.

From ‘cashless’ to ‘less-cash’ society

Visa Europe has released its first Contactless Barometer to benchmark consumer take-up of new payment methods. The research, of 2,000 UK consumers, showed positive feedback about contactless technology and a hunger for wider availability in mainstream retail outlets. No great surprise there…

Mark Austin, head of contactless at Visa Europe, comments: “We are now taking the first steps on the road to becoming a ‘less-cash’ society. The Barometer offers a snapshot of changing attitudes towards payment technology and consumer experiences of using it on the high street. The two key takeaways for me are the need for retailers to keep pace with consumer demand and also for our industry to take steps to ensure consumers are reassured about the security measures present in all contactless cards.”

The key takeaway for me is that ‘cashless’ society has been replaced by the not so grandiose ‘less-cash’ society . A long overdue recognition by the contactless brigade that, however much they might want it, cash ain’t going away any time soon.

Further info on the Visa Europe research here.