MONEY
it is particularly useful where transaction speed is a main driver, such as serving customers quickly and efficiently at busy times in pubs and bars. But a number of concerns may be hindering
growth. “There has been ridiculous hyperbole around just how much contactless would replace existing transactions,” he added, “and the reality has been a much slower burn”. One of the major problems has been the transaction limit, in spite of its security benefits. There is also a ‘chicken or egg’ dilemma for
retailers around investment, according to Luca Bonacina, senior research analyst at IDC. “Shops only want to adopt contactless when they know it’s something customers are going to use, but the customers are reluctant to use the card until many of the places they shop offer this method of payment.” In spite of this, Bonacina said: “The UK is far
ahead of many other European nations with regards to contactless adoption.” High Street pharmaceutical and beauty retailer
Boots is one of the many UK companies that has decided to adopt contactless on a large scale, and it sees clear benefits in terms of reduced queue times from “speeding up traditional card payments,” according to Ben Perdue, assistant project manager of store operations at Boots. In a pilot during 2010, at a time when the
technology was really “in its infancy,” Perdue said Boots rolled out contactless to 32 of its stores. It then “took time to monitor the growth and get feedback”. Boots now has contactless technology across
the country, but chooses carefully exactly which stores to concentrate on. “We have found contactless payments are a great benefit to some of our stores, in particular those located within train station complexes,” he added. But again, its use comes down to time, because in such stores he said, “customers often need to make purchases in a rush”. Perdue attributed the growth of contactless in Boots’ stores to “a combination of increased customer
22 Winter 2014
awareness and a higher volume of cards in circulation”. Near field communication (NFC), a niche form
of contactless technology that allows consumers to pay or discover information by touching their NFC-enabled mobile phone on a reader is also of increasing interest to a number of shops in the UK. But it has met with mixed reviews, and customers
not only need the right phone but the incentive to use it in this way, when they may already have a contactless card that offers the same fast transaction capability. “The business models are a real problem here,” Ubaghs said. “Retailers need to invest a lot to take on the technology, at a time when there are other options out there.” NFC deployments have often been more about
engagement than payment. A recent scheme, called Purple Flag Week, saw Costa Coffee, Odeon, Lush, Pizza Express and other brands run a treasure hunt, with NFC tags on posters that offered consumers games and store discounts. Another project at sandwich shop chain Eat in 2012 saw the cafe chain offer discounts and free coffees, from a ‘Wheel of Fortune’ type mobile game. In spite of the challenges facing NFC adoption,
global sales of appropriately equipped smartphones grew 300% to 140 million units in 2012, according to a report from analysts at Berg Insight. But Apple does not yet support NFC in its iPhones. Mobile wallets may prove a better option when
it comes to the ever-growing area of smartphone related payments. “Instead of NFC, I expect to see the real strength
in mobile to come from barcode scanners, QR [quick response] codes, and mobile wallets,” Ubaghs predicted. “As mobile banking grows, people are increasingly used to making transactions onscreen on their phones.” Indeed, consumer awareness of mobile wallets is
increasing and vendors are fighting for prime position. The technology allows customers to store and manage their debit and credit cards, as well as loyalty cards, on their smartphones, ready for payment.
www.retailtechnology.co.uk
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