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Home Depot, Best Buy In Contactless Interchange Fee Showdown
That said, the future of contactless could carry and transmit much more information and it might permit larger read distances (with security protections) to truly enable better convenience.
For now, though, contactless is at a crossroads, if you will. If a few more powerhouse chains like Home Depot come on board, that could raise the comfort level of quite a few retailers, which might make a major marketshare difference for contactless. On the flip side, though, if a few more major players like Best Buy start abandoning contactless (or sharply limit it, as Best Buy is threatening to do), that could also mushroom, giving other retailers cover if they, too, want to pull back. Such a stampede could easily cripple if not outright kill the contactless movement in the U.S..
Until then, though, ambivalence certainly seems to represent a lot of the contactless sentiment. “Some retailers are saying that they’ll do it when they absolutely need to” because of consumer demand, said Russell Hardy, the VP for retail channel sales for Ingenico, the contactless vendor working with Home Depot.
That’s where contactless can get very chicken-or-the-egg. Consumers aren’t likely to demand it until they’ve used it a lot and grow fond of it. And that’s not likely to happen until many—if not most—of their favorite retailers start showcasing it. In short, consumers are waiting for the retailers to deploy and retailers are waiting for consumers to demand it.
Another hurdle for contactless is that, beyond convenience chains, it’s rarely seen in small to mid-size players. There are several reasons for that. First, unlike Home Depot, there aren’t vendors lining up begging to deploy the technology for free, nor are the card brands offering big-money deals. Secondly, smaller merchants often have shorter customer lines. Without those lines, it’s much more difficult to justify a contactless deployment.
-Marc
July 16th, 2009 at 10:14 am
The biggest challenge with contactless in today’s retail environment is that all of the different players involved: Customers, Merchants, Acquirers, Associations, Hardware Manufacturers, etc. all have different motivations for wanting contactless implemented, and those motivations aren’t in alignment.
Just like in the commercials when everything comes to a halt in the store when someone uses cash or check, Visa and Mastercard are motivated by the “Cash is Bad” mantra. The more you use electronic payments, the more money we (Associations) make. If contactless cards can get one-tenth of one percent of cash payments turned to electronic, then it is good for them.
The merchants are looking to enhance speed and improve brand loyalty. The lack of acceptance by the customers are causing those benefits not to materialize. Worse yet, the few customers that are using the technology are causing the merchants to pay higher fees, so they actually hurt the business.
As far as the customers go, I personally don’t think we will see widespread adoption until NFC, or a competing standard, becomes commonplace. Since the carriers, device manufacturers and associations can’t get their act together on who is going to get paid in an NFC world, I’d personally like to see a bluetooth solution created (Thank you Apple and Google) that does an end-run around NFC.
July 24th, 2009 at 10:57 am
For non-micropayments, the contactless card still needs a signature, which is what takes the time. Plus, payment processing is rarely the bottleneck in retail lane throughput. There is no business case for the retailer and its a gimmick for the consumer and yet another clever mechanism for the associations to raise interchange.
July 26th, 2009 at 11:55 am
I find it interesting how these companies are each going about implementing the contactless based system. I wonder how the hackers are going to react to this actually.
Will we see an updated security for those making a purchase.