Banks: Contactless, NFC are solutions looking for problems

Banks: Contactless, NFC are solutions looking for problems

Summary: Payment cards have been working well so far — however, the question isn't whether there is a need for contactless payments, but how banks can make contactless mainstream.


There's no real need for consumers to use contactless payments, such as near-field communication (NFC), but banks still think that smartphones will be the future for payments.

At the Mobile and Contactless Payments Australia conference held in Sydney yesterday, representatives from ANZ Bank and Credit Union Australia (CUA) said that, despite banks increasingly issuing contactless payment cards and retailers rolling out corresponding sales terminals, contactless payments are still relatively underused.

They said that instead, consumers are still comfortable swiping their cards at EFTPOS terminals or using cash, and are in no hurry to start going contactless — even for small purchases — despite the transition being seen as the means to increase the adoption of NFC phones as wallets.

"Largely, we don't have a payment problem," ANZ Bank Head of Payments John Collins said.

Some businesses, such as Baker's Delight, are comfortable with cash and rarely deal with payment cards — let alone contactless ones — so NFC may not work for them, Collins said.

"In New Zealand, I'm not used to carrying cash, but in Australia, I am," he said. "For merchants that take card, it works well, so what is the problem we are actually trying to solve?"

"Banks really need to answer that question for themselves."

Collins is hopeful that NFC smartphones will become the norm in the future, but said that banks need to get the balance of convenience and security right.

"I'm not saying [NFC] is a panacea for mobile payments, but maybe it's a good first step to start building a level of collaboration [between banks]," he said.

CUA Products and Marketing General Manager Jason Murray, who was also speaking at the conference, has no doubt that we're heading towards a mobile wallet future, but there are hurdles that banks must first overcome.

"Ultimately, consumers are going to adopt this and it's very obvious," he said, drawing on his own experiences in testing NFC phone payments. "Clearly, payment via mobile replacing wallets, and so on, is the end game.

"I just don't think we've done a very good job of getting the customer experience side right."

Topics: Banking, E-Commerce, Emerging Tech, Mobility, Smartphones, Australia

Spandas Lui

About Spandas Lui

Spandas forayed into tech journalism in 2009 as a fresh university graduate spurring her passion for all things tech. Based in Australia, Spandas covers enterprise and business IT.

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  • I don't see it

    I don't understand why anybody thinks that the 'wallet' data needs to be in a handheld device. Wouldn't it make more sense to have it in the cloud? That way it doesn't matter where you are, or whether you brought the right device.

    An NFC payment system is basically saying that possession of the device equals permission to bill purchases to a certain account; in that sense it is like possession of a plastic debit or credit card. There's no particular increase in security with that arrangement.

    Why wouldn't a point-of-sale fingerprint reader be just as quick as waving a mobile phone nearby? The wallet stuff could then be in the cloud.
    Robert Hahn
    • fingerprint?

      Fingerprints are not 100% effective to identify a person in the instant. Besides, they are not secure because anyone can copy your fingerprints more easy than anything.-

      If you don’t want to take a smartphone with you, like everybody else, I’m sure there will be bracelet (or other things) with NFC chip to identify your payment account.-

      In addition, the wallet data is in the cloud, not in the phone. You edit your wallet data through the phone. The phones NFC chip is used to identify your account and the credit card used to pay. The NFC chip is in the phone because everybody takes it with them.-

      What you mean is that there should be a standard wallet system for every smartphone OS. And that it should work even without a smartphone. It is true.-
      • Fingerprints are not 100% effective

        As if credit cards, and even those with chips, or much less a picture on a mobile phone or data emited via NFC is? Even banknotes are often forged!

        All this is complete nonsense. A desire by someone (Google?) to create new business in order to collect yet more personal data (buying habbits, etc) and profit.
  • Arrogant Banks

    "Some businesses, such as Baker's Delight, are comfortable with cash and rarely deal with payment cards — let alone contactless ones — so NFC may not work for them, Collins said."

    He has got it the wrong way around and stinks of complete arrogance.
    The reason businesses aren't encouraging electronic transactions is because banks have been very greedy in taking a much too high cut of a transaction and businesses just don't bother.

    eg In Sweden you look like a complete dill if you say pay in a bar with cash, whereas here it is the other way around.

    It is completely illogical that a cash transaction would cost less than an electronic one. Credit card surcharges, minimum payment fees, it is just crazy.

    Which one really costs more end to end, an business traveling to a bank, the bank employing a teller to weigh coins and count notes, or an electronic transaction end to end that involves little human intervention.

    Banks really need to wake up to this in this country rather than blaming small businesses.
  • Welcome to the Future

    Just another nail in the coffin for Retail Branch's and there staff ! Less of both increases the Banks bottom lines. The future of The big Banks are fully Outsourced IT and Operations, Cashless, no Retail Branches, just ATM's !
    • Do you advocate staying in the past?

      If there is proper competition (questionable in Australia), then it should reduce the cost to everyone.

      Your argument is illogical, would you advocate keeping say switchboard operators in telephone exchanges with higher telephony costs as they were 50 years ago, just to keep people employed?

      Technology has always made jobs redundant, and personally I'm glad I don't have to go to a branch to take cash out and can just wave my card in front of a reader to pay for items. If that means someone loses their job, so be it, that's the cost of progress.
  • Less To Carry

    Who needs a wallet, if you need nothing to put in it? The future will be a paperless, cashless, cardless society. And it’s approaching fast.
    • A wallet or an "smartphone"

      The size and weight of today's smartphones is more than that of the typical wallet. People are used with wallets, not with smartphones. Education expenses is something nobody even talks about!

      Don't let your blind following Google's religion foul you.
      • Getting rid of one

        is the point. As it happens, my phone is smaller than my wallet. That aside, the whole point is that I can get rid of my wallet while continuing to carry my phone. If the phone does both jobs then you can ditch the wallet. The wallet will never take the place of a phone so you can't ditch the phone.

        People were used to walking everywhere before mass adoption of the car - it's called progress.

        I also use NFC already to pay for things (big macs mainly) and I can see how useful it is. By the sound of it you haven't used it? I don't understand why you think adopting new technology is so bad and point to google as the evil master behind NFC when really it's not google introducing NFC.
        Little Old Man
        • How about if I ...

          continue to carry my wallet and skip the phone. I don't have a smartphone. I don't even carry my (non-smart)phone with me much of the time. I have lived for many years without having constant telephone access to everyone I know, or constant access to the Internet. I don't see any reason to change. My credit card works for me almost everywhere these days. Only one or two places that I go still want cash payment. So NFC is not at all useful for me. And I know many other people in the same position.
          Sure, cars replaced (horses, not walking), because they were faster. Obvious difference and improvement. But even then, it took many years for it to happen. And in this case there is no obvious improvement in NFC over what people already use.
          Adopting a new technology is fine, if it's useful and the technology came about because of a demand. In this case, the technology is unnecessary and is only coming about because businesses want customers to want their technology. It's been tried before - create something new and then try to make people want to buy it or want to use it. It works, but only sometimes. Many times the businesses involved have to abandon their plans because consumers don't bite.
          • So you carry a wallet, I don't, everyone's happy.

            I wasn't advocating the immediate change to NFC only payments, no reason why they can't co-exist. All I'm saying is that myself, along with people I know, can see a benefit in being able to leave the wallet behind and pay using my phone. At the moment I don't see enough security for anything other than small value stuff but hopefully that will change.
            Little Old Man
  • Hand your phone over!

    I think NFC will definitely carve out a good chunk of transactions in the next few years, but I don't think it is going to work in all situations.

    For restaurants that have your waiter run your card, I don't think (case1) I'd be comfortable handing my phone over to a waiter to go in the back and run my "phone". Or maybe (case2) the waiter would now have to carry around a handheld terminal to do the transaction right at the table. Either way seems to be an inconvenience to one or the other party. I guess (case3) the restaurant could have payment terminals in each of the tables, but that would be a huge cost for the "benefit".

    I could see it used more at retail, convenience stores, maybe food carts, vending machines/etc; a place with a designated point-of-sale. I don't think it would work too well in bars/clubs without the terminal being within reach at the bar. I wouldn't give my phone to the guy serving me drinks (I've gotten my card back pretty sticky a few times, I wouldn't want that on my phone (really don't want in on my card either, but I don't hold my card up to my head, so it's not as bad).
    • American Express card had smart chips for 10+ years

      which is about the same as what NFC can do ... it hasn't take over. The two places I go to that used to accepted them no longer does any more.

      So what makes people believe that NFC is going to do any better?? Specially when you have to invest $60+ a month (plus the cost of the smartphone with the feature) for the pleasure of being able to use it.

      And then there is the issue of "handing out" your phone to a stranger .... specially at restaurants ....
    • It's already happening

      in the UK since chip and pin. Anyone with chip and pin is told never to let the card out of their sight. Plenty of programs like The Real Hustle show how easy it is to skim a chip and pin if it's out of sight of the owner. Most restaurants in the UK now have mobile terminals to pay at the table or you pay at a static point. Any restaurant that asked to take my card off me 'into the back' would be told politely where they can go. It has happened before and I simply refuse to release my card (as per my bank instructions) and then I go to the payment terminal with the card. I NEVER let my chip and pin card out of my sight. It would be no different for my phone.
      Little Old Man
  • Don't put all your eggs in a single basket

    This is what replacing your "wallet" with NFC (or whatever, on your smartphone) asks for.

    When you travel to strange places, you are advised to not keep all your documents, all your credit cards and all your cash in the same wallet, right?
    Then why you insist so much to put all of your life in an smartphone, that besides being too fragile, is also an expensive piece of junk worth stealing?
  • Banks: Contactless, NFC are solutions looking for problems

    Kind of agree with the banks in that I don't like the idea of these contactless payments when its just as easy to swipe a card. However there are more uses for NFC than for making transactions so don't discount that technology.
    Loverock Davidson-