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Q&A: Contactless payment technology


Retail luminaries such as Tesco’s outgoing CEO Sir Terry Leahy are among those who consider contactless payment technology as a huge area of growth for retailers to explore in the coming years, but what do companies need to know about it?

Ian Rutland, Marketing and Communications Director of credit card processing solutions provider Commidea, addressed some of the need-to-know questions for Retail Gazette this week.

And he claims that the tipping point for the technology will come when a major retailer such as Tesco or Sainsbury’s rolls out a contactless payment plan.

How can retailers make contactless payment work for them?

For it to work, it must address the individual retailer’s need. With transactions via contactless payment capped at £15, this way of buying goods is not going to be useful for a whites good retailer. However, figures show the average ticket value when using the technology is around £4, so the system is ideal for companies such as coffee houses and sandwich bars, where fast and low value transactions are common.

How long before contactless payment options are the norm?

For the contactless payment tipping point to occur all it will need is for one of the big retail players such as Tesco or Sainsbury’s to roll it out. Self-service checkouts are potentially really good places for the technology to be used by the big grocers. Health and beauty retailer Boots announced a pilot scheme towards the end of last year, showing that big names are already considering its potential. You would also expect the younger generation and young adults to adopt contactless earlier than most due to their familiarity with technology.

How much quicker is it to use contactless technology than normal chip and pin?

The average contactless transaction is 0.5 seconds, compared to three to ten seconds for chip and pin. Using cash and having to wait for change is also a slower process than contactless. Using the new technology effectively takes the payment obstacle out of the critical process of getting people through tills at pronounced peak periods during the day, such as early mornings and lunchtimes.

Which retailers are ahead of the game when it comes to contactless payment?

Eat and Pret A Manager are among the companies that use the technology well. The perfect storm for adoption is made up of three elements; mass issuance of contactless-enabled cards or devices; mass acceptance of the technology; and well-informed consumers and staff using the system. Both of these businesses tick all of these important boxes.

Why should retailers consider contactless payment technology if they haven’t done so already?

Research has shown that using contactless payment technology can typically result in five to 15 per cent higher ticket values and, due to the speed of the system, those who are usually self conscious about using their credit or debit cards in busy queues have another option at their disposal. As well as the speed of service, it reduces the amount of cash that needs to be handled, which can lower shrinkage rates for retailers and other businesses.

Words by Ben Sillitoe

Published on Wednesday 26 January by Editorial Assistant

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