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Contactless PaymentsProduct Type: Market Research ReportPublished by: Datamonitor Published: July 2004 Product Code: R313-9840 Description IntroductionIn spite of the success of plastic cards, cash remains the dominant payment tool for low value transactions. Contactless payments provide an opportunity for card issuers to enter this space. But what are the arguments in favor of the technology? What are the dangers? This briefing provides the answers. Scope In depth profiles of contactless technologies from Hong Kong, Singapore, USA and the UK provide a background to the discussion Analyses the potential for the technology to succeed, providing the case in favor of the contactless payments, and the potential problems Profiles the contactless payment technologies being piloted by American Express, MasterCard, and Visa, providing Datamonitor's view of each Based on Datamonitor's in-depth knowledge of the cards and payments market Highlights Saturation and a growing commoditization in cards markets have limited the potential for issuers to continue to achieve growth through card issuance alone. Contactless technology allows issuers to capture a portion of the payments market currently dominated by cash, thus increasing card activity Successful schemes operating in Asia point the way to a fruitful launch in the US and Europe. In the US trials, consumers have responded positively, while retailers have reported an increase in both the volume and value of transactions. It is important to take a balanced view; contactless payments will not take over the world overnight. However, they do present issuers with an excellent opportunity to grow revenues and increase customer loyalty. Reasons to Purchase Gain insight into the potential applications of contactless payments through in-depth profiles of success stories Benchmark the solutions currently being tested by the card schemes Learn which markets provide the best opportunities for contactless payments both now and in the future Table of Contents TABLE OF CONTENTSABOUT DATAMONITOR 2 INTRODUCTION 6 Cards & Payments Briefings Service 6 What is this briefing about? 6 Who is the target reader? 7 How do you use this briefing? 7 Scope of the briefing 8 OVERVIEW OF CONTACTLESS PAYMENTS 9 Defining contactless payments 9 What is the argument for contactless payments? 10 Plastic cards can only replace certain parts of the cash and cheque market 10 Credit card issuers have seen their margins squeezed 12 Issuers must, therefore, find new ways for consumers to use their cards 12 Contactless technology is operated widely in transport systems 13 Oyster: Contactless transport payments for London 13 ez-link: Moving towards payments 16 Octopus: The evolution from ticketing to payments 19 Summary 22 SELLING THE PROPOSITION 23 Benefits to retailers and consumers 23 Consumers benefit from greater speed, security and convenience 23 Retailers experience higher revenues and lower costs 24 Benefits to card issuers 25 Additional card usage 25 Retention benefits for first movers 25 The key opportunities lie in small-ticket retailing and services 25 Commuter payments present a big opportunity 26 Fast-food outlets will see benefits 26 Supermarkets can provide speedier service 26 At the petrol pump 27 These benefits have encouraged the card schemes to look to enter this market 30 American Express ExpressPay: an independent payment tool 30 MasterCard PayPass: Contactless functionality on a standard payment card 34 Visa Wave: A multi-function payment card 37 Summary 39 THE FUTURE DECODED 41 It is important not to overestimate the potential of contactless payments 41 Contactless payments are still relatively untested 41 Traditionally, cash-replacing technologies have struggled 42 However there are a number of problems to be overcome 44 Contactless readers must be able to accept all contactless cards 45 Retailers and consumers must be convinced of the benefits 46 Security is a concern 48 Contactless payments will therefore impose costs on issuers 49 Which markets present the biggest opportunities? 50 Public transport has provided a platform in the past 50 Asia and the USA present the biggest opportunities 51 EMV migration allows schemes to launch their own contactless programs 52 Datamonitor Cards & Payments Team view 55 APPENDIX 57 Supplementary data 58 Definitions 59 Research methodology 61 Future readings 62 Current publications 62 Forthcoming publications 62 Relevant links 63 Datamonitor’s custom research capabilities 64 Retail Banking Team contact details 66 How to contact experts in your industry 67 |
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