Pay it forward

FST. Contactless payments are gathering momentum across Europe. What benefits can they bring to retailers and consumers and are there any hurdles to widespread adoption?
The most immediate and obvious benefits to retailers – faster transaction times and increased customer satisfaction – have been seen in all the major Contactless pilot projects we have undertaken Globally. What is less well known but is backed up by hard data from these trials is the increases in footfall, transaction values and repeat transactions from customers that use Contactless.

Some retailers still subscribe to the view that Contactless is predominantly of value in outlets that have very severe peaks of demand – for instance sandwich bars and coffee shops during the commute windows and lunchtimes. However, our trials prove that the convenience of Contactless purchase encourages the cardholder to buy more, more often.

From the consumer standpoint convenience is key, with benefits from decreased transaction times for their own transactions but also the inevitable decrease in time waiting in line for others to pay.

FST. Unattended payments look to be the next big thing. What is driving this growing interest and what technological challenges does it present?
Prior to the adoption of EMV, when taking payment in an unattended location, it was impossible to be sure that cards were genuine. Similarly it was impossible to verify the identity of the card holder. EMV solved both of these problems, making card payment a much more attractive proposition for anyone seeking to accept unattended payment.

At the same time the desire for customer convenience, competition pressures and the constant drive towards cost reduction has led to a significant rise in vending and other unattended applications.

As a result of these factors we are set for an explosion of unattended card payment in the coming years with applications ranging from high-value self-service check-in at hotels through to low-value Contactless transactions at drinks vending machines.

Technologically the main challenge to meet is environmental and vandal resistance – both are areas which I’m glad to say Ingenico’s products meet or exceed industry standards.

FST. The mobile phone is now being viewed as a payment device for the future. Do you foresee a time when the phone will replace the wallet in consumers’ pockets? What technologies will be key in making this a reality?
Studies have shown that consumers notice the loss of their mobile phone even faster than the loss of their wallet and, additionally, their phone is accidentally left at home less often. When we also consider that the latest NFC phones have significant capabilities with regards to security of applications and encryption of data, it then seems like a natural progression for these devices to replace wallets and the ever increasing cards they contain.

The technologies required to enable NFC phones to operate in place of cards are already in place, and indeed numerous trials of NFC payments have taken place globally. However the phones are not yet generally available – we expect to see all major vendors offer the phones next year, with mass availability in 2010.

FST. How are technology providers addressing security concerns in the payment space? How are challenges arising from new payment methods being dealt with?
Industry standards such as PCI PED set an ever-higher level of security and Ingenico always seeks to lead the industry in the development of devices meeting the very latest requirements. Additionally, Ingenico works closely with standards bodies, banks, law enforcement and customers to educate the market and address security concerns pro-actively to minimise risk to our customers.

The nature of the payment industry means that security threats for new payment methods are well analysed well in advance of introduction. Contactless is a good example here – the cards are designed to only be read from a short range, test showing that it is impractical to mass-read cards from a distance. Additionally the dialogue with the card doesn’t include the credit or debit card account details required in order to higher-value, non-contactless transactions. Lastly further protections have been built in allowing the card issuer to control risk by setting transaction numbers or transaction value limits that require fallback to PIN entry.

FST. Do you have any predictions for how payments will progress in the coming months and years? Do you have any exciting developments in the pipeline?
While the way we pay is likely to be influenced most strongly by Contactless and Unattended payments over the coming years, the greatest changes will occur in what we pay on and what else those devices can achieve for our customers. With the emergence of colour touchscreen terminals and open operating systems on payment devices we can see a future where promotions, advertising and a wide array of value added services are available at nearly every point of sale in the near future, delivering Ingenico’s customers significant additional revenue.