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Contactless Payments Are Tagged for Growth
Retailers continue to identify radio-frequency technology as their best hope for contactless payment systems.
Posted Aug 13, 2007
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Radio-frequency identification (RFID) developers are moving society closer to a largely cash-optional global economy, as suggested by "RFID Contactless Payments," a report published today by ABI Research. While different geographic regions have seen greater uptake in certain aspects of contactless payment, the consensus is that adoption of RFID technology for business and consumer is growing steadily: Worldwide demand for contactless hardware, software, and related services will reach more than $1 billion by 2012, up from just $260 million in 2007, according to the study. As of yet, commercial RFID use has mostly been limited to trial programs, with few permanent deployments. ABI contends, however, that even those have shown the value of the technology and the business processes they enable, bringing benefits:
  • to card associations as they increase the reach of their products;
  • to card issuers aiming to differentiate their products and services;
  • to merchants who can speed up transaction times and transaction values; and
  • to card holders and customers who no longer need cash on hand and can spend less time waiting to pay for goods.
To fulfill the promise, buy-in from all parties is required for full adoption, and regional differences in payment systems mean that cross-border contactless solutions will experience uneven development. "Europe has lagged behind Asia and the U.S. when it comes to contactless payments, but the stage is now set for adoption," says Jonathan Collins, senior analyst with ABI Research and author of the report. Contactless payments are scheduled for a 2,000-retailer initial rollout this fall in London, subsequent to full deployment throughout the United Kingdom. "As in many major cities across Europe, millions of people across in London use contactless ticketing on public transport," Collins says. Contactless retail payments, though, are a bit more novel for Europeans--and also, to a lesser degree, for Americans. "Major banks and card associations are behind the launch, but contactless payments acceptance will rest on their ability to convince both retailers and consumers of the value of contactless payments," the report states.
ABI believes the imminent U.K. deployment will be important for the long-term future of RFID contactless payments, due to the scale of the rollout as well as the particular technologies involved, such as EMV-based contact smartcards. (The "EMV"--the standard for wireless chip interaction--was named for Europay, MasterCard, and Visa, the three companies behind its development.) Adoption will also bolster the rollout to mobile handsets of Near Field Communication, the technology that enables not just contactless payments but a host of other contactless applications as well. "As Europe moves closer to contactless payment adoption, there are lessons to be learned from ongoing rollouts in Asia and the United States where contactless payments are making the greatest headway," the report states. Where Asia has led the way in the aforementioned use of mobile handsets, the U.S. has moved ahead with point-of-service deployments in what Collins calls "low value, high traffic" retail situations where credit cards are the typical payment option. "Across both regions, contactless payments deployments have been tuned to specific market environments. European rollouts will have to do the same." Related articles: There's Something About RFID Revenue Decreasing revenue says some good things about the industry, according to a new report. Every Day I Stand the Queue Contactless payments and line-busting techniques are penetrating busy retail venues, to the delight of shoppers and staff. RFID: Past the Hype and Poised for Growth The technology needs to be applied correctly, but smart implementations will reap rewards. RFID: Beyond Concept Radio frequency ID tagging is no longer a what-if question, but other questions remain.
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