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Old Habits Swipe Contactless Adoption From Payments

September 27, 2012
Credit|Debit|Prepaid|Emerging_Technologies
Ben Jackson
Mercator Advisory Group
Although contactless payments have been around for years and offer a speedier way to pay than swiping a card, they have yet to catch on in a big way. Even in those stores where contactless pads are part of the card payments terminals, it is not common to see someone tap a card.

The reason for this is not because of any inherent problem with the availability of the cards or terminals themselves. American Express offers expresspay, Discover has Zip, MasterCard has paypass, and Visa has payWave. A number of large retailers, including Macy’s, CVS, and McDonald’s have contactless readers. Instead, customer and clerk habits make contactless payments a novelty as opposed to a standard way to pay.

Take a recent experience I had in a major department store with a contactless terminal. As I reached up and tapped my card on the contactless terminal, the clerk reached out, took my card, and swiped it through the terminal. I asked if the contactless reader was broken, and she said that she thought I was handing her the card. The idea of a contactless payment hadn’t registered as I tapped my card. I am not the only one who has had this experience. Read about Mercator analyst David Kaminsky’s experiences here.

Even cardholders with contactless cards tend to swipe rather than tap. We are all so conditioned by past experience as to how we expect cards to work that we are likely to swipe a card first. The set up and language of the transaction are such that we slide right into the old grove worn into our payments behavior by the magnetic stripe.

Contactless cards have taken off in the transit segment, where they have been in use for years. The Octopus Card in Hong Kong, which could also be reloaded and used for purchases at places like convenience stores and fast food restaurants, led the way in many respects as far as showing the possibilities for contactless cards, transit, and using the cards for more than fare payments. Now, with agencies like PATCO offering open-loop contactless cards in the U.S., contactless use and adoption may get a boost as commuters get used to the idea of tap and go and recognize the same symbols from the transit ticket machines at local coffee shops and convenience stores that they may visit on their commute.

Nonetheless, retailers should not rely on other segments to teach their customers about new payments. Those who want to take advantage of the benefits of contactless payments should train their employees and alert their customers to the availability of contactless payments. Clerks prompting customers to use contactless cards and promoting the “futuristic” aspect of the payment could go a long way towards increasing use of the form factor. In addition, because contactless will be seen by many as a new payment form, it would be easy to tie it to other technology such as e-mail receipts in lieu of printing a paper one – which can lead to capturing customer data for future marketing and loyalty program use. Additionally, developing a contactless payments habit now will pave the way for mobile payments and open up new doors for customer engagement and marketing. 

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