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.

Context and immediacy in payments

I’m always interested in trying out new stuff, especially when it’s related to payments. Earlier this year I jumped on the Mondo Alpha launch as I wanted to see just how different their payment experience would be. If the UK digital challenger banks want to make an impact they will have to do things very differently to the legacy banks. Being nice to customers is great but it isn’t going to change banking. I fully expected to use Mondo a bit, see how it worked and then go back to using my usual cards. However, much to my amazement, I’m still using Mondo (and using it more than ever) four months later. Why has Mondo caught my imagination? They’re not a full bank yet, they only have one product, they don’t (yet) support Apple Pay. There are many aspects of the Mondo experience I love. On my recent trip to Copenhagen I used Mondo for all my DKK expenditure because Mondo doesn’t add the usual 2.75% ‘fee’ on non GBP transactions.Transaction Detail Dark

However Mondo’s real stickiness for me is down to two factors – context and immediacy. When I make a card payment – contactless, chip and PIN or online – I get instant notification of what I’ve spent and where on my Apple Watch via iOS notifications. This doesn’t sound revolutionary but how many payment providers do that for every transaction and include merchant, geolocation and category data when you view the transaction in an app? Consumers have been conditioned by the legacy banks not to expect immediate visibility or additional data for transactions. Apparently it’s acceptable to wait a couple of days for a payment to appear on your account! Mondo has turned that model on its head and despite the constraints of card scheme payment rails, manages to deliver a rich transaction experience to customers. Payments isn’t just about convenience, it’s about information and control and even in beta Mondo is delivering that to customers.

This post first appeared 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.

Apple Watch six months on

Apple WatchRecently I realised I’d been wearing my Apple Watch for six months and it gave me cause to reflect on how it had fitted into my daily routine. When my Apple Watch arrived six months ago I hadn’t worn a watch for several years; I’d got into the habit of checking my iPhone for the time and using my Fitbit for fitness tracking.

However as phones get bigger it’s increasingly inconvenient to check the time on a phone so it’s back to a watch. The Apple Watch is a controversial gadget with both supporters and detractors. For me it’s the obvious extension to the iPhone and more useful than I expected.

So what makes the Apple Watch so useful?

As someone who (curiously) finds payments interesting Apple Pay is of course my favourite app! Whilst Apple Pay adoption is apparently low I still believe its time will come. Changing consumer behaviour is usually a slow burn and payments is no exception. Whilst using Apple Pay can be a bit hit and miss, especially with Amex cards or older POS terminals, it’s a big improvement on a contactless card, both from a security and a transaction information perspective.

Apart from Apple Pay, of the standard Apple Watch apps the most useful ones to me are Maps, Messages, Activity and Apple Pay. Maps is a top app; pull up directions on your iPhone and then follow them on your Watch. More secure, more convenient.

However there’s some great innovation tucked away in third party apps:

Using my Apple Watch to get cash from an ATM without a card is a neat trick thanks to NatWest Get Cash. The NatWest app generates a code that can be used to get cash from any NatWest ATM.

Tapping my Watch to unlock my Mac using MacID is a timesaver over typing in a long password.

Weather app Dark Sky makes use of a complication to warn you when rain is imminent.

Day One lets you note your location with a tap so you can add a geolocated note later.

It’s still early days for the Apple Watch but already it’s apparent how it will contribute to the impact of wearables on consumer behaviour.

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.