From December 2007

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Charles Walton, executive vice president at INSIDE Contactless, a European firm that manufactures chips for contactless devices, sees benefits in the technology for all parties to POS payments. “There are enormous opportunities for [card] issuers, consumers and retailers,” he says. “The challenge is to get it right.”

At Arby’s, getting it right means getting more banks on board. “For retailers, this all boils down to ROI, and a problem I see is a lack of issuers in the market,” Waugh said. “We certainly aren’t where I’d have expected us to be at this point.”

According to the Smart Card Alliance, 11 banks and American Express have combined to issue some 30 million contactless card devices; several industry sources estimate there are roughly 500,000 POS terminals that can handle contactless payments.

But card issuers are not the only organizations lagging on the adoption curve. Adil Moussa, payments industry analyst for the Boston-based Aite Group, says companies that process credit and debit card transactions show little interest in selling contactless payment functionality to merchants. In fact, none of the major card acquirers recently queried by Aite believe contactless payment functionality is critical to wooing new merchant clients.

“They see it as a neutral benefit at best,” Moussa says.

Meanwhile, a survey by Aberdeen Group found 81 percent of retailers expect to increase spending on contactless adoption over the next two years.

Walton encourages banks and retailers to add functionality to contactless chips, such as tying use of the devices to loyalty programs. This creates “a very powerful tool for retailers to implement so that they can take advantage of contactless in a broad way,” he says.

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