Is paying with contactless too easy?

Earlier this week BBC News wrote a piece on contactless payments under the title “Will paying with contactless cards make us less healthy?”. The contention here is that paying with contactless is so simple and without any visibility of ‘real’ cash it’s too easy to spend more, especially on unhealthy snacks. I can see the argument although disagree with it from my personal perspective. Yes, contactless payment is simple with less friction than cash or indeed chip and PIN but it doesn’t make me spend more.

However my contactless payments (almost) always have one key difference compared to standard contactless payment using cards – a mobile handset. When I make contactless payments I always get an immediate notification to my Apple Watch (via my iPhone) either because I’ve used Apple Pay or because I’ve used Mondo. Both payment methods give me instant visibility of what I’ve paid but without the friction of using cash.

Contactless payment by card is a transitory step on the way to paying by mobile handset. Whilst mobile payments like Apple Pay and Android Pay are still niche they will continue to grow (Apple Pay launched across Singapore’s major banks this week). The security and information that mobile payments provide to users will ensure their eventual success. As I outlined recently, it’s all about giving consumers control over their money.

This post first appeared on Disruptive Views.

Friction and frustration in payments – the state of UK contactless

There’s been a lot of comment recently about the success of contactless payments in the UK. I’m a big fan of contactless payments, especially when they’re secured and tracked using Apple Pay. Contactless takes some of the friction out of paying and delivers a simpler consumer experience. However despite the growth in contactless, the reality is a myriad of inconsistencies across retailers, especially where contactless involves mobile handset payments like Apple Pay. My recent research indicates that consumers are still presented with a confusing and inconsistent experience when using contactless payments.

Amex Apple PayFor the average consumer it’s impossible to know which contactless payment methods work where. For example, Waitrose supports American Express via card contactless, Apple Pay handset and Apple Pay Watch. However go to Boots and Amex card contactless works fine but neither Apple Pay handset or Watch works – presumably an acquirer or hardware issue. Pret a Manger Amex card contactless and Apple Pay handset are fine but Watch fails. Elsewhere, some stores accept Amex Chip and PIN but not contactless.

Apple Pay transactions do not need to be limited by the £30 transaction limit as the handset is covered by Consumer Device Cardholder Verification Method. However the only evidence in store I’ve seen where this limit does not apply is in Apple’s own stores. To prove this I paid for a MacBook Pro with my Apple Watch last year (an expensive experiment!). Other stores that have lifted the limit seem to keep it a closely guarded secret!

To further add to consumer confusion, Tesco has now launched its own handset based payment method PayQwiq which uses an app generated QR code to pay with a pre-loaded credit or debit card. I really don’t want retailer specific payment apps as well as generic ones – this just adds to payment friction.

Payment methods must be ubiquitous and consumers not be expected to think about what will and will not work. The payment industry must work to create consistency across retailers so consumers can pay with certainty.

Originally published on Disruptive Views.

A week with Mondo

Last week the nice people at Mondo signed me up for the alpha of their new payments product. Mondo is one of the new generation of companies applying for UK banking licences who aim to fundamentally change the way we bank.

Mondo iconWhat makes Mondo different from other ‘digital challengers’ is that rather that wait for their banking licence application to be approved and then launch a product on an unsuspecting public, they have launched their ‘banking’ app in parallel with their licence application. Mondo wants to use customer feedback to help build and evolve their product before they formally launch as a bank. Mondo has done this by launching a prepaid account with a contactless MasterCard via the prepaid card issuer Wirecard Card Solutions under Wirecard’s emoney licence. When Mondo’s banking licence is approved and they become a ‘real’ bank they will provide their own bank accounts and issue their own cards.

Mondo notificationMondo’s aim is to put consumers in control of their spending using the power of their iPhone (Android et al is coming later). All transactions appear instantly in the app whether it’s a debit card top up to add funds to the Mondo account, an ATM cash withdrawal, a contactless transaction, a chip and PIN transaction or an online transaction. Transaction data includes merchant details, geolocation details, plus historical spend data for that merchant. There’s also the option to add extra data including a note and a copy of the receipt to each transaction.

Mondo cardAlthough the app is currently in alpha it works amazingly well. As soon as I make a purchase I receive a push notification on my iPhone or Apple Watch with confirmation of the transaction details. Over the past few days as I’ve used the app, additional features have been unlocked – a nice way to introduce the user to more functionality. Despite being an early release the app is considerably more engaging than legacy bank apps. A neat feature is the ability to ‘freeze’ my card temporarily so it can’t be used; great for people who mislay their cards and then find them again. When I freeze my card the app image of the card is covered in ice and the button underneath offers to defrost it!

Mondo defrostSomething else that appeals to me is the ability to add funds to my account using Apple Pay, making topping up friction free. If you haven’t yet paid in app using Apple Pay, you really haven’t seen the future!

Mondo is definitely one to watch and if they keep up their momentum the legacy players need to be looking over their collective shoulders; it’s not looking good for them!

Originally published on Disruptive Views.

When payments misses a trick

I’ve lost count of the number of times I’ve written about how innovation in payments must reduce the friction in the transaction process if it is to have any chance of succeeding and capturing the attention of consumers.

Apple Pay in-store generally meets this criteria, assuming your bank is signed up and you accept the usual contactless limit restriction of £30 (in the UK) in most stores. Once all the banks are signed up and the limit restriction is gone, Apple Pay will feel like a truly frictionless payment experience, especially using Apple Watch. A couple of weeks ago I got an insight into the future of in-store payment when I bought a MacBook Pro using my Apple Watch – an expensive test and even the Apple retail employee said it was a first for him!

Fill Up & GoLast week I signed up for Shell’s new Fill Up & Go payment app which allows you to pay for your fuel at the pump using your iPhone. I duly downloaded the app, created the required two different Shell accounts (work that one out!) and added my PayPal credentials (that’s how the payment works). The process was awkward and fraught with errors and if I hadn’t been a dedicated payments professional I would have given up long before the end. However having eventually got there I jumped in the car and went to the local Shell station to buy some petrol. No QR codes in sight – apparently it’s not operational yet although the QR code was there in July and I have a photo to prove it. So not only a poor sign up process but also a failure to deliver at the point of sale. One bizarre point that caught my eye in the instructions is that apparently you have to remember to only scan the QR code on the pump from inside your car because you’re not allowed to use your phone outside your car (really!). What Shell ought to be doing is implementing Apple Pay at the pump – but then of course you’re not allowed to use your phone outside your car!

Before launching, payment providers need to step back and look at what their application actually means for consumers and whether it addresses the friction issue.

Payments acceptance confusion at the point of sale

Historically card acceptance in-store was fairly straightforward. You knew if shops took cards because they had a sticker in the window; if they took cards you were safe with Visa and MasterCard and if you were lucky they also took American Express.

The arrival of contactless payments brought greater payments convenience at the point of sale but also confusion. Consumers were now faced with a new way of paying with cards and having to determine if the option existed in their store of choice. Sometimes the card reader has a contactless label on it, sometimes the LCD display shows contactless acceptance, sometimes it’s necessary to ask for contactless to be enabled for the transaction, sometimes the card reader looks like it’s a contactless terminal but contactless hasn’t been enabled on it. What’s happened to taking friction out of payments?

Recently I discovered another twist in the contactless acceptance story. Some stores that accept American Express, do not accept American Express for contactless; it’s Chip and PIN only. And it’s not just small stores where this is a problem; I recently discovered this in WH Smith after battling with a self-serve contactless terminal.

The arrival of Apple Pay in the UK has further highlighted the chaos around card acceptance in stores. Displaying the Apple Pay logo in-store should mean that consumers can always pay with Apple Pay; however to make an Amex Apple Pay payment, the store must also accept Amex cards and accept Amex for contactless. Plus, thanks to Consumer Device Cardholder Verification Method, Apple Pay does not need to be restricted by the £20 contactless limit for cards; however so far it seems that only Apple’s own stores and Pret a Manger have lifted this limit. Other stores will do so over the next few months but again it’s a muddled landscape for consumers.

I guess this all makes perfect sense to people in the payments industry but to the consumer who just wants a simple way of paying in-store? Definitely not. It’s confusion like this that sets back the case for moving away from cash and cards for in-store payment. The payments industry needs to do more to take the friction and frustration out of payments by removing point of sale confusion around product acceptance.

Apple Pay in the wild

Much has been written about the launch of Apple Pay in the UK; how it works, where you can use it, which cards are supported and so on. But what’s it like to use in the wild? Setup is very easy – especially if the card already stored in your Apple / iTunes account is issued by an Apple Pay partner. Adding additional cards involves snapping them with the iPhone camera, adding the CVV2 number and waiting for activation. A couple of times the card expiry dates were incorrectly recognised so one to watch before confirming card details. My American Express cards activated with no additional steps, my NatWest card required an additional authentication step via a code sent by SMS.

Using Apple Pay in-store is straightforward, especially with the iPhone. The Apple Watch is a little tricky as there’s a knack to twisting your wrist so the Watch face is over the contactless reader but you avoid smacking the face of the Watch on the reader and risking damage!

So what makes paying with Apple Pay better than just using a contactless card? Apart from the novelty value of paying with my Watch, there are two important elements for me.

Transactions are more secure – the retailer does not receive my card details so there’s no risk of them being stolen from compromised point of sale equipment or elsewhere. Each transaction is tokenised so there’s nothing useful to steal.

Realtime transaction alerts to monitor spending are important and can avoid later disputes. American Express already offers real time transaction alerts via iPhone Passbook notifications. Recently I was double charged in-store for a chip and PIN purchase; despite the terminal confirming the transaction was successful, the retailer assured me the till showed it hadn’t gone through so asked me to try again. I was able to show him a double transaction on my iPhone (and yes both transactions did settle later).

There’s still a long way to go with Apple Pay. Removing the £20 transaction limit and installing contactless readers in stores that typically process higher value transactions will massively increase the utility of Apple Pay as a payment method.

I’ve not yet had the opportunity to pay in-app – that’s my next challenge! Securing in-app card transactions, which are inherently susceptible to fraud via stolen card details, will be transformational in reducing online card fraud.

What sets Apple Pay apart from every other mobile or wearable device I’ve tried for payments is that it does feel it’s been designed with the consumer in mind.