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Q&A: Richard Armstrong of Barclaycard


Barclaycard’s Head of UK Payment Acceptance Richard Armstrong talks to Retail Gazette about the introduction of contactless payment systems to the high street.

How will contactless technology help retailers?

Contactless payments are quicker than both cash and traditional card transactions, ultimately reducing queues as more people begin to take advantage of them. This benefits both the consumer and the retailer, who will achieve a higher customer turnover, as well as avoid the huge cost of processing cash. McDonalds, EAT, Subway, Pret a Manger and Slug and Lettuce are among some of the popular retailers already taking advantage of contactless technology and the benefits it provides.

As mentioned above, there are cost benefits. There is a hidden cost to cash, which can be difficult to properly quantify. But using contactless will prevent or reduce the cost of cash counting, banking and the endemic problems of staff mistakes and theft. This is underlined by the fact that the pricing structure for contactless is appropriate to the smaller value transactions for which it is designed.

What will we be saying about contactless technology this time next year?

There will be a number of developments over the next year. The most obvious will be the number and variety of contactless products on the market – be that cards or mobile. We are seeing other financial service providers begin to play catch up on the technology and announcements by both mobile operators and handset manufacturers that they will begin working towards contactless solutions. As a result, the technology will be mainstream by the end of 2012. This will be helped by, amongst other things, VISA’s sponsorship of the London Olympics.

On the consumer side, contactless terminals will be an even more common sight for consumers, and their awareness will be better. Already nearly half recognize the contactless logo, up almost 100% in the last twelve months. This time next year, we anticipate a significant increase in consumers using contactless technology, and should be in a position to say that purchasing products in this manner will be a preferred method of payment for many.

We are also beginning to see the number and variety of merchants offering contactless payments increase. For example, we are getting a great deal of interest from the transport industry and in a year’s time this will be a well developed sector for contactless. Once Co-op rolls out the technology, which it has committed to doing, we should also see other large grocers come on board.

What is needed for contactless technology to take off in the UK?

The number of merchants that are now rolling out contactless or have committed to doing so is an indication that we are at a crucial stage in the technology’s development. There are now nearly 13 million contactless cards in circulation, of which 11.4 million have been provided by Barclaycard and Barclays. In addition, over 50,000 retail outlets have contactless terminals throughout the UK.

Contactless technology is becoming a far more essential part of retailing, and merchants understand this. In order for the technology to take off further in the UK, more merchants will need to begin using contactless terminals, and consumer awareness needs to be raised as to the benefits that contactless transactions can afford them. Additionally, with people now opting for card payments, even for small value transactions, contactless is the best solution for consumers and merchants.

How can consumers be assured about the security of contactless technology?

Paying for small value items via contactless is more secure than carrying cash as the technology has been rigorously tested and we have a number of safe guards in place.

The first safeguard is the £15 limit, which reduces the amount that a fraudster could spend with a contactless product. In cards this is augmented by the fact that customers will intermittently be asked to input their PIN. Our contactless mobile allows customers to select the level of security they want so that they can opt to enter their PIN every time they make a payment. Most however choose not to do this. For these customers, the security is in the fact that users need to upload credit to the app. To do this they have to input a PIN and a maximum of £150 can be held on the phone at one time. Finally, should anyone discover fraudulent transactions, these are covered by Barclaycard’s 100% fraud guarantee and so any losses will be reimbursed.

What was the point of Chip and Pin if this is now the best way to pay?

Contactless payment is very much about giving consumers choice of how they pay – in this case for small value transactions. We see it very much as a cash displacement tool for low cost payments. We see this as ending the scrabble for change with quick, easy and convenient payments. As such it is an augmentation for Chip and PIN, which will continue to have a role where higher values are being exchanged.

How would you reassure retail staff that their jobs are safe amid the advent of contactless technology?

The introduction of contactless technology does not affect the requirement to have staff at premises. It serves to improve the speed and ease with which shoppers make purchases, but will require the same staff at the checkout to oversee the transactions.

Published on Wednesday 14 September by Editorial Assistant

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