Last week, news broke that Barclays 'contactless' credit cards had been exposed to fraud, with the bank giant facing the prospects of official fines after it emerged that more than 13 million customers are at risk. (source below)
Whilst such concerns over so-called ‘wave and pay’ technology are not new, I doubt that security worries are the main reason why these cards simply haven’t caught on in the UK.
Instead, the bigger issue is simply that consumers are more interested in reducing the number of plastic cards in their wallet than upgrading them to contactless ones. As a customer, embedding a single chip inside a mobile phone makes far more sense, and the technology for these ‘mobile wallets’ is already available. (source below)
Photo courtesy of shareski - http://flic.kr/p/4SWr8q
Card providers are well aware of all this, but until recently, there’s been too much brand vanity at stake to admit it. Having a chip hidden away in a card doesn’t expose the branding each time a card is used for a start. And of course each credit card provider believes that it’s their brand that truly commands consumer loyalty above all others. For example, Orange launched its Orange Cash wave ‘n’ pay card using Mastercard’s PayPass technology amid a fanfare of proposed customer benefits, including as Pippa Dunn (VP of Orange Propositions) put it, a “unique ability to collect and redeem awards against future Orange products and services”.
But the truth is that Orange Cash is no more ‘unique’ than dozens of other card propositions that bundle loyalty points, cash-back and a whole range of other incentives into card use. It all comes back to the misguided belief that consumers truly love the card provider. They don’t. Above all else, most customers want convenience and optimum value-for-money.
If a single card was smart enough to know which would be the most beneficial loyalty scheme to use with a transaction for petrol/mobile phone top-up/cinema/etc., customers would ditch all that bulky plastic in a heartbeat.
Another reason why consumers aren't gagging for wave 'n' pay is first-mover advantage. London’s Oyster card is the UK’s most successful wave and pay card by far. It removes not only the hassle of buying physical tickets, but guarantees the user the best price for the travel used that day. On top of that, it works reliably, despite being a little long-in-the-tooth as contactless technology goes these days. But I repeat, there are only so many cards a consumer actually wants to carry, and for Londoners, one of these slots is already allocated to Oyster now.
Against all of this, retailers are not stupid. They know that mobile wallets are the future, and the likes of Google and Amazon have stolen a march by creating online payment options that are easily accessed from a mobile phone. Whilst the big mobile phone networks lobby the European Commission to try and get a deal to pilot mobile wallets, consumer groups worry about security and fair competition.
So while all of that plays out in Brussels, back in the real-world, the consumer continues to carry around half a hundredweight in loyalty and payment cards that they could well do without….