The Context of Contactless - Presentation to Merchant Payment Ecosystem, Berlin, 2015.


The Context of Contactless

Geoffrey Barraclough | Barraclough & Co


Source: Barraclough & Co from ECB


Successful payment innovation requires the needs of all stakeholders to be aligned

QuickNo hassle

FreeWidely

accepted

Shoppers

QuickGreat CX

Hassle free implementation

Cheap

Retailers

VolumeMarginShare

Payment industry



Yet contactless is (slowly) gathering momentum in some markets

Visa focusing on UK, France, Poland, Slovakia & Spain

Potential user base established: •20% of Visa cards are enabled •50% of new cards are enabled (Smartcard Association)

Acceptance network established: •1.5m enabled terminals. •All new ones must be enabled by 2016

Result:•460m Visa contactless tx in 2014•of which >60% were in UK

4.4% of al l transactions are now contactless. ATV = £8.26. Very l i t t le fraud

Limit increases to £30 in September 2015

It’s a London thing•50% of contactless tx are within M25•30% of low value tx in London are contactless

Driven by

• TFL & multiple convenience stores• BarclaysBarraclough & Co | Strategy | Proposition Development | Market Research & Insight | Retail Technology | Payments


From traditionally very simple shopping journeys…

Marketing Visit shop

Geo message sent to mobile

Make purchase

Share on FB

Post review

After sale service



…..to today’s much more complex ones.

Respond to marketing

Visit shopping

mall

Geo message sent to mobile

Share on FB

Post review

Loyalty points

Customise product

Visit website

Read reviews

Search recommendations

Research product

Download app

iBeacon message

Marketing Visit shop Make purchase

After sale service


But each retail sector is changing at its own pace

High

Low

White goods

Researchedpurchase

Researchedpurchase

Habitual purchaseHabitual purchase

Impulse purchaseImpulse

purchase

Fashion F1 Grocery Fast food Petrol Rapid transit Indicative graph only. Source: Barraclough & Co


Payments and shopping is best understood through behavioural economics



Our research showed five behavioural factors determining the speed of adoption of new ways of paying

Reflex Pay – how easy is it to break into long standing payment habits?

Speed is relative – shoppers and the payment industry have different concepts of time

Shoppers are easily discouraged. The first transaction has to be good.

Confirmation – needs to be clear and consistent.

There’s a strong pessimism bias with smartphone payments. Apple Pay may overcome this

Geoffrey Barraclough | Barraclough & Co | www.barracloughandco.com | +44 7808 14202



Meanwhile retailers are focused on transformation programmes delivering a much broader and enriched customer experience.

Get me in/out quick

Kiosks and self-service

Retail as theatre

Mobile point of sale



Retail transformation based on three key IT programmes. Contactless and and other F2F payments will now need to integrate

with web platforms

The speed of process change will accelerate the move to the cloud.

Head office systems centered around single versions of truth

Extension of e-commerce platforms into store




Some questions for the discussion

Is London blazing a trail or will it continue to be unique?

In which retail sectors will shoppers genuinely value contactless enough to make the effort to learn a new way of paying?

Which retail sectors can gain competitive advantage, higher customer satisfaction or lower costs by promoting contactless?

Does the payment industry understand its customers well enough to position contactless in context of their other transformation programmes?

Are contactless cards a short, intermediate, step on the road to mobile/NFC instead?


@geoffreyb

Report available on my website


The Context of Contactless - Presentation to Merchant Payment Ecosystem, Berlin, 2015.

Technology

Transcript of The Context of Contactless - Presentation to Merchant Payment Ecosystem, Berlin, 2015.