U.S. Merchants in Need of Education on Contactless Payments
July 2, 2012
In early June, I took a taxi to meet some friends for dinner in Boston. As the driver pulled up to the restaurant, the screen in the back of the cab displayed the ride’s total cost, along with the question “Cash or Credit/Debit.” I selected credit, took out my card, and held it against the contactless reader currently installed in most Boston taxis. The driver turned around, saw this, and exclaimed “Hey! Hey buddy! The machine doesn’t work like that! Just swipe your card down the side!”
As he finished speaking, the receipt began to print, a clear indication that the transaction had been completed. A confused expression came over his face, so I explained to him that, yes, his POS terminal did in fact have the ability to read contactless-enabled cards, and that he could expect to see more people paying with contactless technology in the next few years. He turned back around and said, “Oh, I figured you were just drunk already…”
This story illustrates the fact that despite all of the attempts to create excitement among consumers for mobile payments, merchants are relatively ignorant about both mobile payments and their contactless antecedent. Although I’m not always accused of being intoxicated when paying with my contactless credit card or the RFID tag on the back of my phone, most merchants who see me paying with contactless technology are surprised to find out that their terminals possess that capability.
Compare this to my experience purchasing a few items in a convenient store outside the recent ACT Canada Cardware conference. When I swiped my card through the magstripe reader, nothing happened. The merchant took my card, noticed the “contactless-enabled” emblem, and held the card to the contactless reader. The transaction completed, and he said, “Card worked just fine with the contactless reader. I’m not sure what’s wrong with the magstripe.” Not only did this merchant realize his terminal had contactless capabilities, but he was able to recognize immediately that my card was contactless enabled. This seemed to be the case with most of the Canadian merchants with whom I interacted.
At ACT Canada’s conference itself, the focus was placed squarely on mobile payments, with topics discussed including “The Future of Mobile Wallets,” “Security and Privacy in a Mobile World,” and “Fraud in the Mobile Market.” Between my experiences at this conference, and MasterCard recently ranking Canada as second only to Singapore in terms of mobile payments readiness, there is little doubt that merchants in Canada are significantly more prepared for mobile payments than those in the U.S.
If the U.S. is going to adopt contactless payments in the near future, the merchants with contactless capability need to be educated regarding that feature of their terminals. If they don’t know that contactless payments even exist, then they certainly don’t know about any potential benefits it could have for their business once mobile NFC payments arive, and therefore have little incentive to either upgrade their terminals or encourage customers to use the contactless reader. No matter how excited technophile consumers may get over the potential to replace their wallets with their phones, it won’t mean a thing if merchants aren’t interested in accepting mobile payments. And the first step in convincing merchants to adopt contactless technology is teaching them that if a customer is tapping their card against the POS terminal, he isn’t just drunk and confused. Well, at least not necessarily.