http://tomorrowstransactions.com/2014/06/contactless-sentiment/ Thought leadership from Consult Hyperion Wed, 16 Jul 2014 07:14:15 +0000 hourly 1 http://wordpress.org/?v=3.9.1 http://tomorrowstransactions.com/2014/06/contactless-sentiment/#comment-229386 Wed, 04 Jun 2014 03:52:51 +0000 http://tomorrowstransactions.com/?p=4470#comment-229386 Dave – the % of cash in transactions under $20 is way over 90. I am curious why would merchants demand “contactless” instead of cash in LVP and micro payments when this would cost them as much as 10% of the transaction amount? This is probably more than the margin they earn on say $2 or $3 purchase. For as long as the current IX business model is used in these circumstances there will be no progress. Eventually funds needed for transaction funding will not be “acquired” from the issuing banks on the other side of the “interchange networks”, but will come directly from various SVAs and connected current accounts, and the consumer risk will be taken out of the payment equation and moved to the credit issuers’ business model. We will see then that the marginal cost of payment transaction processing is near zero and so will be the cost to the merchant (regardless of the transaction size). There will also going to be a shift towards compensation derived from facilitation of higher sales for the merchants and essentially giving away the payment for free (see LevelUp and Dwolla).
Contactless cards (or contactless mobile payments) are but an attempt by the payment established to extend the life of the 4-party business framework that outlived its usefulness. Would you propose such framework if you were starting a universal payment cloud from scratch today with all the networks and consumer electronics ubiquity?

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