CBA: Industry got contactless payments rollout wrong

Commonwealth Bank of Australia (CBA) explains why contactless payment technology has been so slow to gain traction in Australia.

The Commonwealth Bank has opened up on the banking industry's rollout of contactless payment technology in Australia, offering a mea culpa on not doing enough to educate consumers and merchants about the benefits of the technology.

Speaking at the CeBit Future of Payments conference in Sydney, Nick Aronson, general manager Transaction Banking, Institutional Banking and Markets at the Commonwealth Bank of Australia said financial institutions had failed to address the change management issue at the heart of the introduction of contactless payments.

"There is a whole change management aspect which has to happen … Providers have to work hand-in-hand with both the consumers and merchants to educate on why [contactless] is better," he said.

"One of the mistakes that was made really early was by saying 'contactless is fantastic – here you go, everybody. Use it.' And there wasn't necessarily the education as to why it is fantastic."

On the consumer side, issues around the security of contactless payments were also under-addressed. As were merchants' concerns about the cost and time investment in training staff on the new technology.

"There was a lot of hidden concern about security from a customer perspective that we didn't do a good job as an industry of educating people on as to how and why it was secure," Aronson said.

"There was also concern at a merchant level about having to retrain staff [on contactless payments]. Especially in retail and hospitality, you have got large turnover of staff, people working shifts, and the ability to train large masses of staff on new payment technology quickly just isn't there."      

Providing a merchant perspective on contactless, Kristie Atkins director of sales at Amalgamated Holdings Limited – the owner of Event Cinemas and a number of hotel and resort brands – said that contactless had initially hurt the company's business.

"We have a one-minute maximum transaction time – actually, one minute is far too long –and for us contactless is now representing up to 60 percent of transactions in the candy bar environment, which is great, but on launch [contactless] actually blew out our transaction time because we had to do the job of educating the customer about what this is, why we have got it, how to use it," she said.

"Then you had people asking whether we were going to scam them while they were using it, am I going to get ripped off. But now we have gotten over that little hill [contactless] is a dream for us. People are spending three, four, five, six, ten dollars. It is quick. We are more a youthful type of drawcard. The young people think it is sexy, fun and new and all that, and now the transaction time is coming down. But, it was an interesting period upon launch."  

Concurring, Aaronson said the adoption of contactless payments had indeed increased in the last year and a half following acceptance among consumers and retailers.

"If you look at the ramp-up of contactless [payments] it is only in the last 18 months or so that we have seen a tripling … of the number of contactless transactions because you have reached a critical mass of cards on issue, and you have also reached a critical mass of merchants accepting [contactless]."

Corinne Ng, VP and GM, international payment options Australia at American Express International cautioned that with contactless being simply another form factor for payments, financial institutions would have to work harder to convince merchants and consumers of its value and benefits.

"Unless you have the ability to drive really incremental value to the customer –a benefit for them in using it— I am not sure adoption rate will accelerate as quickly as it could," she said.

"With contactless in particular, you also have the reliance on a lot of different players lining up to commit to investing in infrastructure and changes. It is a longer road than we all think."