advertisement
advertisement
advertisement

Amex Kills Its Payment Fob. Will Others Follow?

Written by Evan Schuman
April 2nd, 2008

Pushing a convenience/ease-of-use argument, payment processors have spent much of the last two years trying to get consumers to use different payment methods. But 2008 has thus far not been friendly to them.

The once-promising biometric authentication (which said the greatest convenience is using fingers, which are quite handy) effectively died with the death of PayByTouch this year. Contactless payment, which is one of the things that killed biometric payments, is having problems of its own, with persistent security problem reports, questions about how well they work and issues about whether most contactless-payment-owning consumers even know that they’re carrying them.

This week brings the news that American Express is halting its ExpressPay keyfob, some six years after the payment giant started offering it. The program is expected to deactivate the last of its fobs by July.

There are many reasons the fob may have died, but at least Amex—with six years of fob effort under its payment belt—can’t be accused of not giving the fob enough time to work. If one wanted to point the finger at Amex, the worst that could be said is that it didn’t provide much marketing support for the device nor any financial incentives for cardholders to use it. What might be an attraction of the novel for the typical PayPal pay would be seen more as the fear of the unknown for a traditional Amex aficionado.

The convenience argument also fell flat under realworld conditions. Consumers typically had to grab the fob key chain from their pocket and then fumble to bring the fob to the front and then to be scanned. For many, it’s simply faster—and more comfortable—to grab their credit card. At best, it wasn’t a material time or effort saver.

The security issues were not likely a consumer factor as the nature of the device itself undermined its convenience pitch.

It’s important to note what contactless has worked. EZpass, the tollbooth payment system, is a fine example and much of it is because it is positioned so the user has to do nothing at all. On top of that, it truly does the payment a lot faster than other methods and it also offers automatic toll discounts. A triple play: true concrete time-savings; absolute ease-of-use; and no-games discounts. On top of that, marketing makes the case clear, with lots of big signs and EZPass-only vehicle lanes. So they even get the marketing right.

As the next wave of payment form factors come into play—and you can bet mobile will try to play a crucial role—it’s important to focus on those issues as you decide what to support. Consumers are resistant to change unless you give them a reason to change. The fob seems to not be cutting it.


advertisement

Comments are closed.

Newsletters

StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!
advertisement

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

StorefrontBacktalk
Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.