May 10, 2006

Merchant acquirers doubt benefits of contactless (Analyst Study)

US payments consultant First Annapolis reveals that merchant acquirers are expressing deep doubt over the benefits of contactless. The following comments were taken from the April issue of the firm’s Navigator report:
“The biggest problem with the value proposition is simply the substance of the claims. Most acquirers believe any time savings relative to mag-stripe is related to the no-signature requirement rather than RFID, per se, and a no-signature policy could be applied to magstripe technology without any accompanying investment in POS technology.”

“The secondary claims of increased sales are also suspect. Pilots and early roll outs in fact report higher average tickets for RFID enabled cards than for cash and other payment cards. However, this observation is far from conclusive.”

“The parties with the best information are also the parties trying to generate primary demand for the technology and do not have an interest in airing data contradictory to the stated value proposition.”

“There is a certain amount of cynicism in the acquiring market right now, regarding RFID, and this will no doubt impact the timing of acquirers’ efforts to implement RFID solutions broadly. However, the level of promotion on the issuing side is impossible for acquirers to ignore, and there is ample evidence that acquirer product development teams are examining the technology actively across the industry.”

Contactless needs to offer a much stronger value proposition for merchants if it is to get around the cynicism in the acquiring market.

See the related article in Card Technology here.

1 comment:

RFID solutions said...

Gr8 post,
thanks for such agood information. RFID has reached to our daily life also. We blessed by RFID technical solutions.