Consumer awareness of contactless cards is low and mobile wallets don’t fare much better.
A few months ago I moderated a series of focus groups where I asked the participants how many had a contactless card. Now I didn’t expect everyone to have one, nor did I expect everyone who had one to know that they did. However, to my amazement, I was met with blank stares. I actually had to draw the contactless logo on the whiteboard so people could look at the cards they had in their wallets to see if they were contactless cardholders.
Similar confusion exists among merchants. As part of Mercator’s Small Business PaymentsInsights series, we asked small businesses what contactless payments they accept. The disparities in the responses to this question are detailed below:
Doesn’t the logo mean that the consumer can pay with a contactless card or mobile device regardless of wallet vendor or form factor? Merchants apparently don’t know what they can accept, and that’s a problem if contactless usage is to grow: only 16% of small businesses report they can accept contactless cards while 50% report they can accept Apple Pay and 41% report accepting Google Pay.
When I ask at the checkout counter if they accept Apple Pay, it is not uncommon for the clerk to say “I don’t know,” or, my favorite, “You can try.” Thanks for the help.
Consumers who are new to contactless are going to try once or twice and then go back to their old ways of dipping or swiping a card if the contactless options don’t work or aren’t available. That’s just simple consumer behavior 101. Expecting consumers to “keep at it” until they come across a terminal that will work for them is not reasonable in the real world.
All of this is to say, there is significant confusion at the two most important parts of the contactless payment chain—the consumer and the merchant.
How did we get to this point? Rather than assign blame, I think it is best to talk about how we overcome the obstacles.
Make mean – There are competing standards and technologies currently required to accept the different versions of contactless. It is unreasonable to expect a merchant or consumer to know or care about this. When they see the contactless logo on a terminal, they should be able to use/accept contactless payments in all its forms.
Merchant education – Merchants, including frontline staff, need to know what contactless payments are and how they are accepted. Solve item 1 above and this will become materially simpler.
Consumer education – Just telling consumers that their card can now be used to “tap & go” or can be loaded into a wallet is not enough. They need to have a compelling reason to switch from tried and true payment methods before we can expect mass adoption. They also have to know they have a contactless card. Many people don’t know they have the capability available on their card. Solve item 1 above and this will become easier.
Broader issuance – Major issuers are phasing in contactless cards as expired and lost/stolen replacement cards are issued. This is going to take time. Even when we get to near universal issuance, item 3 above will be required.
If the broader payments industry fails to address some of the issues raised above, contactless will fail to become mainstream. Fixing it is going to require a concerted effort by all parties in the industry – networks, issuers, acquirers, equipment manufacturers and industry associations.