Contactless payment system uptake driven by smaller retailers: Analysts

Local and independent stores must follow Woolworths' example, analysts say

Organisations must adopt contactless contactless payment systems in order for consumers to benefit from such technology, according to two industry analysts.

Telsyte research director, Foad Fadaghi, told Computerworld Australia that widespread adoption of the payment system is key to future success, which follows supermarket giant Woolworths' recent move to the system.

“Contactless payment systems are long overdue in the Australian market,” Fadaghi said.

“The key to success is a large ecosystem of retail outlets supporting the payment system, which to date has been lacking.”

Sharing the sentiment, IDC analyst Mark Novosel said contactless payment systems are being phased in with the help of larger retailers.

“I believe it will be a phased approach that will certainly be lead by the larger retailers, such as Woolworths, now jumping on board,” Novosel said.

“Certainly the cost of replacing terminals will play a part in the pace at which smaller retailers jump on board, however, as the technology gains momentum and consumers become accustomed to the convenience of contactless payments, uptake will increase correspondingly.”

With Woolworths’ use of contactless payment being a much overdue kickstart for the industry, Fadaghi said supermarkets aren’t the only type of company needing to offer such services to consumers.

“While the Woolworths network will help the industry grow, consumers will start to greatly benefit when local and independent stores where smaller value transactions frequently occur, such as cafés and restaurants, get these services.”

Even if smaller companies increase their use of the contactless systems, Fadaghi said that there may be some competition between the popularity of mobile devices, with real-time banking on smartphones being a draw card for consumers.

“Mobile phones will be significant competition for the card-based payment systems,” he said.

“The convenience and ability for the phone to provide real-time banking services, such as balances, top ups and transfers, as well as payments, might give this approach an advantage over card-based systems.”

Other countries, including the United States, have implemented contactless payment systems in mobile devices like the iPhone that works with Visa’s payWave contactless card system.

Follow Lisa Banks on Twitter: @CapricaStar

Follow Computerworld Australia on Twitter: @ComputerworldAu

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