Retailers Must Do More To Tout Tap-And-Go, Expert Argues

Lack of consumer awareness regarding contactless transaction technology ranks as a leading concern among retailers and may ultimately impede development of contactless payments based on mobile phones, research released this week indicates. Yet most merchants that have adopted contactless programs don't promote those programs to their customers, according to the research, conducted this fall by Boston-based researcher Aberdeen Group. Following up on a similar study it conducted last year concerning contactless payment (Digital Transactions News, Jan. 9), Aberdeen found that 32% of some 225 respondents have implemented a program to accept contactless cards and fobs. But for all respondents to the survey, the biggest challenge confronting the technology is customer awareness and usage, with 55% citing this factor. Indeed, for the majority of companies that have adopted contactless, tap-and-go payments are ranging between 1% and 3% of all transactions three years after major banks began issuing contactless tokens. “It should be a higher share of transactions,” Sahir Anand, a senior analyst at Aberdeen who wrote a report based on the survey, tells Digital Transactions News. “There's still a lack of customer awareness.” Retailers must shoulder more the marketing and information burden, Anand argues. Most merchants, he says, have left this function to the banks and card networks, with the result that few link loyalty rewards or other incentives to contactless usage. Aberdeen's survey found that even among the merchants with the most effective contactless programs, only 19% are informing customers about how to use contactless cards and in what stores the cards will be accepted. This is despite benefits the merchants themselves cite, including greater customer satisfaction and increased sales stemming from faster tender times and higher average tickets. Merchants point to near-field communication (NFC) as the next step in their contactless strategies, Anand says. But this technology, which relies on mobile phones equipped with special chips enabling tap-and-go payments at point-of-sale readers, is still in pilot with the card networks and mobile carriers. Progress will be even slower, Anand argues, unless merchants begin promoting contactless card programs. “The question is, how do things move forward?” he says. “The response I've gotten from retailers is NFC, but for that to happen retailers have got to get more active in promoting contactless.” He adds that banks also need to issue more contactless cards. About 19 million contactless cards are in circulation in the U.S. Another issue is that nearly one-third of the surveyed merchants that had done the most effective work with contactless are still not aware of NFC. Anand expected a higher level of awareness of the technology. “One hundred percent of the best-in-class merchants should be aware [of NFC],” he argues. “There's a lot to be done by banks, credit [card] associations, and the retailers themselves.” Aberdeen's survey, “Cashing in on Contactless: The Roadmap to Successful Contactless Payment Implementation,” embraced retail industries ranging from supermarkets to mass merchandisers and restaurants. Underwritten by Discover Network, Dove Consulting, MasterCard International, ViVOtech Inc., and VeriFone Holdings Inc., it is available at www.aberdeen.com/link/sponsor.asp?cid=4425.