Contactless Payments – it’s the future

Filter vs Espresso
4th Apr 2009
Which bank?
6th Apr 2009

So today I have been looking at contactless payment systems, this kind of does what it says on the tin and allows you to pay for products without having to put your card into a reader or remember a PIN. The oyster card used for London transport (buses & tube) is probably the best known contactless payment system in use in the UK.

After a little Internet searching I came across Squid cards, there doesn’t appear to be many competitors out there yet but I am sure this is the start of the technologies popularity. So the Squid card allows customers to add up to £100 on to the card then make payments for items in stores that accept the card. The advantage for us as a coffee outlet is that it speeds up the payment process (no inserting into card reader, typing a pin and waiting for authorisation) and therefore improves the customer experience.

Customers can then go on-line and top up their cards whenever they want. The facts on the system:

  • You pay a monthly fee for hiring the terminal
  • You pay a 1.5% transaction fee
  • You pay up to £3.00 per card
  • Minimum order of 200 cards

The card also supports loyalty schemes and Coffee Republic are trialing it with this feature enabled. It creates a seperate running total on each card of loyalty pounds that the customer can opt to use against each purchase (like the supermarket loyalty cards). The terminal shown on the right just connects to the Internet to complete transactions so no additional phone lines are required. Once you have a terminal installed in your outlet you can accept all Squid cards irrespective of who issued the card, so if a Coffee Republic customer comes in with the card they can use it in our store. The only bit they wouldn’t be able to use is the loyalty pounds earned through Coffee Republic purchases which seams fair enough.

The other good news is that with most banks charging transactions fees of 2% on credit cards and 25p on debit card purchases this is significantly cheaper in the long run. The major cost hurdle is the cards but this could be passed onto the client or at least some of it – say 99p per card.

The other negatives are that it doesn’t currently integrate with very many EPOS systems so staff would have to double entry transactions into your current EPOS and the Squid terminal. It also doesn’t support direct debit auto-topup of the cards but this is due sometime in late 2009.

All in all though it looks like a positive win for customers which is the important thing so watch this space for it being trialed in our first store at some point.

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