Payments Testing - March 19, 2024
Contactless cards are everywhere these days. Recent press releases from Mastercard, Credit Karma and CNBC all tout contactless cards as the wave of the future (no pun intended). The Motley Fool has gone so far as to say that we are entering “the golden age of contactless”.
Of course, when we say “everywhere”, we are really talking about here in the USA. Shockingly, the rest of the world is well ahead of us in the deployment and use of contactless cards and readers. One of the reasons for this is that many countries are also well ahead of us when it comes to public transportation, which is a foundational use case for contactless cards. Now that the technology has been proven internationally, many US transit systems are moving in this direction.
Unfortunately, in most retail settings, contactless does not mean touchless. Other than walking into one of the handful of Amazon Go stores sprinkled across the country, most shopping experiences still require a fair amount of hands on contact. My recent trip to a big box DIY store for an urgent "shelter-in-place" home repair illustrates this point.
Fact or Friction
After picking out the materials needed at the store, I head to the self check-out lane in an attempt to leave the store as quickly as possible. But this particular retailer has the fancy new POS kiosks that customers are required to man themselves (i.e., self check-out – I get it), which means picking up a hand-held scanner👆 to record the purchase items, then answering various questions via touchscreen👆, entering my debit PIN👆👆👆👆, and finally answering a question about whether I want a printed or e-mailed receipt👆. Overall, a very “high touch” experience that will change only minimally with the use of a contactless card.
Checkout lanes manned by store staff are even worse because they add the extra dimension of close personal contact on top of the regular payment process. In fact, the cash register has emerged as the most dangerous place in the store.
These processes that surround the swipe or dip or contactless “tap” are not likely to change any time soon. The US payment system is large, complex and does not lend itself to rapid change (i.e., the friction).
A relatively simple change, like no longer requiring signatures on credit card transactions, can serve as a good example. It has been more than two years since the card schemes stopped requiring signatures, but many retailers still print a receipt and ask you to sign it (touch). There are many reasons for this – involving merchant preferences, processors, terminal software, even staff turnover and training – but the net result is a patchwork of different payment procedures that cause friction for consumers.
Driving Change: An “All-Hands” Effort
Full implementation of contactless in this country will be much worse than dealing with cardholder signatures. The technology underlying contactless EMV cards (the global standard) is actually different than the technology used for contact EMV (the dip). This means even more complications for everyone in the payments ecosystem, especially the consumer, who is likely to find that while she can swipe or dip a Visa card at a preferred retailer, she can only tap an American Express card. US PIN debit transaction processing rules are another complicated story that is delaying the roll-out of EMV contactless capabilities in this country.
Will we get there eventually? Sure, we will. The current COVID-19 crisis is driving a lot of change from consumers, retailers and payment processors. The thing is, we don’t know how long the current situation will last and we don’t know exactly what changes will be required. We just know that there will be a lot of change coming at us over the next several months and years.
So what can you do? The best way to deal with this stream of never-ending change is to put the people, processes and tools in place that allow your organization to adapt and respond as quickly as possible. Everything that changes must be tested. That means improving your ability to test by using modern tools that support remote access, automation, integration, and collaboration. Forty-seven percent of organizations indicate that testing is their biggest source of delay in their development process. Don’t be those guys.
The COVID-19 pandemic highlights the importance of dealing with rapid change to both survive disruption and take advantage of new opportunities. Clearly, some organizations have been better prepared than others to navigate the current crisis, but every financial services company has certainly found gaps in their business continuity processes, especially in the area of testing. This lesson has touched the entire payments industry and must be taken to heart so that we are better prepared for “next time”.
