[Dave Birch] At the New Payment Channels conference in London, Julian Niblett gave a presentation about contactless from the major retailer perspective. He is head of cash for Boots, one of the U.K.’s largest retailers. They are a good case study, I think, because there are parts of their operation where contactless would work, but other parts where it would not. Therefore, they have to develop a sophisticated strategy and understand carefully where to make investment.
Their average transaction size is under £10, but that disguises a wide range range (from, say, cosmetics to snacks). So it’s not a simple case of converting big stores or small stores, high street or out of town. Within a store, some departments might benefit but in other departments it would be a waste of money. But how confusing would it be for customers to try and figure out where they could use contactless or not? And how much would it cost to train staff to handle customers properly in these circumstances.
The key figure that Julian gave that will be of interest to people here was that Boots banks £2.5 billion in cash every year and it costs them £1.5 million whereas they bank £2 billion in card transactions and it costs them £14 million. Hence he asks, quite reasonably from his point of view, why cards (that should be electronic and efficient) cost ten times as much as cash. He also gave an excellent insight into the way that retailers think when he said, and I quote, “we’ve had our fingers burned with chip and PIN”. I’m going to do what I can to persuade Julian to make a Digital Money podcast to explore his perspective further.
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