Friday, 8 April 2016

Payments is so hot right now

There was (as is often the case with such industry gatherings) a huge amount of hot air generated at Money 20/20 Europe, which took place in Copenhagen this week. Twitter was awash with people raving about how various new fangled offerings are going to rewrite the payments rulebook. Virtual reality headsets are the next big thing. Biometrics is a must have. Social has changed everything, blockchain technologies rock, etc etc.

But the truth is that, while a change is gonna come, no one at the event knew exactly how that change will manifest itself. A case in point. Contactless is still failing to live up to the hype, even though various experts continues to insist it’s what the world is waiting for. Many Brits, particularly older people, are still reluctant to make contactless payments, new research finds.

Future Thinking, a business intelligence research consultancy, and Toluna carried out an online survey and analysed the results of 2,315 respondents across the UK. Highlights include: 31% never pay by contactless as they don’t trust it; 14% don’t know if their cards are contactless; 27% think the current limit of £30 is the maximum amount payments should be; Age plays a key role in usage. 22% of under 35’s never pay by contactless as they don’t trust it compared to 43% of over 55’s.

This brings me to one of my biggest payments bugbears. There is not enough focus in the sector on what the consumer and the merchant want. What customer and merchant problem does contactless actually solve? Why has Apple Pay yet to get customers excited on a massive scale? If the mighty Apple can’t make mobile payments work, who can? Fear of the unknown is a major issue here. Also mobile payment propositions are a long way from achieving widespread merchant acceptance. If, upon entering a store, I have to check that a retailer accepts Apple Pay, then you've added friction compared to using a card or cash.

Too many people are ignoring these and various other roadblocks as they get swept up in a hype machine powered by the banks, card schemes, consultants, analysts and FinTech startups. That, at least, is my take on things. But what do I know?

Scott Thompson
Senior Editor
IBS Journal

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