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In contactless we trust

Week 40, 2007

Contactless is the only option anyone thinks of when developing a transport payment system nowadays. In this environment, contactless brings convenience, high throughput reduced maintenance expenses.

The payment industry, so far is split between issuing contact (EMV) and contactless cards (MasterCard PayPass or Visa payWave). Switching from contact to contactless brings advantages for merchants: they have a quicker throughput, thus can make more transactions, serve more customers with less resources, all of which is good for their profitability. And everything that's favorable to merchants is favorable to the acquirers.

Of course, evolving to contactless payment is a good deal for the smart card industry as well as the card reader industry. It brings more projects, more cardholders and merchants to equip.

Having more cardholders, who will use their cards in a wider variety of situations, is positive for the issuers. More card use, means more cards.

By using contactless cards, the payment industry gets closer to is longstanding dream: reduce the use of cash, and increase the use of payment means that represent a profit for the industry.

And, at the end of the day, we realize, no one asked the cardholder!

According to various studies, cardholder's reactions are quite diverse. Many cardholders are happy with the added convenience brought by contactless payments, and end up increasing their card)based expenses. But some of them are still frightened by security issues. And lack of consistence in the messages delivered by the industry reinforces such fears. In countries where Chip-and-PIN has been the rule for years, the whole payment industry forwarded reassuring messages to the population reaffirming the security brought by the PIN. Now, all of a sudden, we expect cardholders to accept that a card that can be used without a PIN for most transactions, or that will ask for a PIN every few transactions is as secure as a Chip-and-PIN card. We can't be surprised some cardholders are reluctant to accept such messages, and to switch to contactless cards.

The industry has to do an internal effort to align its security messages. This is the only manner to reinforce trust in electronic payment means, and eventually to increase penetration of contactless payment systems.

Thierry Spanjaard
Chief Editor
Smart Insights