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."
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Talkback
I don't see it
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.
fingerprint?
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
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
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
Do you advocate staying in the past?
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
A wallet or an "smartphone"
Don't let your blind following Google's religion foul you.
Getting rid of one
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.
How about if I ...
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.
Hand your phone over!
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
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
Don't put all your eggs in a single basket
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