Speed, Convenience of Contactless Payments Lead to Quantifiable Merchant Benefits Says Smart Card Alliance Report
Princeton Junction, NJ, April 20, 2004–Speed and convenience top a long list of contactless payment benefits that appeal to consumers, merchants and issuers according to a new report from the Smart Card Alliance. Of particular interest to merchants and issuers is that these advantages translate into quantifiable business benefits.
The new Alliance report, “Contactless Payments: Delivering Merchant and Consumer Benefits,” profiles leading contactless payment initiatives including MasterCard PayPass™, ExpressPay from American Express, Bank of America’s QuickWave and ExxonMobil Speedpass™ and presents many quantifiable results from actual field experience in these programs. For example, the white paper reports that MasterCard PayPass cardholder transaction volumes increased 12% from the prior year at the PayPass trial merchants, and that American Express ExpressPay pilot results showed that customer average transaction size increased 20 to 30% compared to cash spending at participating merchants.
“Contactless payment is gaining momentum in the United States, with millions of people already using it in one form or another. We thought it was time to look at factors driving this success,” said Randy Vanderhoof, executive director of the Smart Card Alliance. “In particular, we examined this developing trend from the viewpoint of merchants, because experience has shown that delivering meaningful benefits and a positive business case to this group is essential to success for new payment technologies. The good news is that the benefits of contactless payments for merchants are real and quantifiable, and the same holds true for consumers and issuers.”
In developing the report, the Alliance’s active Terminal and eTransaction Infrastructure Task Force drew on their own experiences and other sources, including interviews with executives from American Express, Bank of America, JCB, MasterCard International and Visa USA, to get input on contactless payment initiatives and market forces for the new report. The companies testing contactless payment in market trials reported benefits for merchants in select segments.
“In addition to an increase in transaction volume at MasterCard PayPass merchants, PayPass also moved customers through checkout lanes more quickly. The most significant time savings recognized was in the drive-thru environment, where MasterCard PayPass shaved between 12 to 18 seconds off the purchase time as compared to cash,” said Betsy Foran-Owens, vice president, Product Services, MasterCard International. “Contactless solutions, such as MasterCard PayPass, are ideal for quick payment environments where speed is essential, such as quick-service restaurants, gas stations, drug stores, supermarkets and movie theaters,” added Foran-Owens.
David Bonalle, vice president and general manager of advanced payments development, American Express, also reported impressive advantages for merchants involved in ExpressPay pilots. “A time-motion study revealed that, on average, ExpressPay transactions are 53% faster than paying with payment cards with no signature, and 63% faster than cash,” said Bonalle.
The report discusses these and other benefits for merchants implementing contactless payment. It presents a sample business case, describes which merchant segments can benefit most, and explains what a merchant needs to do to implement contactless payment at the point of sale.
Benefits to consumers and issuers are also discussed, along with profiles and status of current U.S. financial organization contactless payment programs.
Individuals from 17 member organizations in the Alliance Task Force were involved in the development of the report. Lead contributors included representatives from American Express, Atmel Corporation, Axalto, Bank of America, First Data Corporation, IBM, Infineon Technologies, JCB International Credit Card Co., MasterCard International, VeriFone, Visa USA, ViVOtech, and Washington Metropolitan Area Transit Authority (WMATA).
“Contactless Payments: Delivering Merchant and Consumer Benefits” is written for executives and high-level functional managers in retail and financial services, and is available from the Smart Card Alliance Web site at /.
About the Smart Card Alliance
The Smart Card Alliance is a not-for-profit, multi-industry association working to accelerate the acceptance of smart card technology.
Through specific projects such as education programs, market research, advocacy, industry relations and open forums, the Alliance keeps its members connected to industry leaders and innovative thought. The Alliance is the single industry voice for smart cards, leading industry discussion on the impact and value of smart cards in the U.S. For more information please visit http://www.securetechalliance.org.