Wednesday, January 28, 2009

Contactless PayPass Cards at Carrefour in France - a Transaction Limit Enigma

To my great satisfaction I read recently that Carrefour will issue it's PASS card with contactless technology in collaboration with MasterCard.

The new card will be on the cutting edge of current card technology,including multiple accounts on the same chip, giving consumers the choice to pay with their own money (debit) or funds made available by their bank (credit). It also includes extended purchasing guarantees for electrical/electronical goods, and Carrefour's loyalty scheme.

I was all in all quite pleased about the prospect of paying using the contactless card, and benefit from increased speed and convenience when checkouting out of Carrefour stores. That is, until I realized that someone had decided to out a max limit of €25 for contactless transactions, which means that I will have another factor to consider when paying my groceries: tap&go or dip&PIN?

Why complicate the process?
Honestly, I am not sure. Security? Could be. Someone in the card organization or the issuer might believe that it is inherently more risky to let me use the convience of a contactless interface.

I don't. Prove me wrong, but I am willing to take the risk. The card issuer should, as well, in my view.

War on cash, then? Well, maybe. MasterCard and Visa have always wanted to replace cash, and they are doing a decent job at it as well. However, the war will not be won by complicating the cardholders' lives.

The limit of €25 has apparently been set based on research indicating that 80% of all cash transactions are below this threshold.

Really? I actually checked out my grocery shopping transactions over the last 6 months, and here is what I found:
- I did 85 supermarket transactions, at an average of €58 per transaction.
- 80% of the transactions were above €25.
- My card payments ranged from a low €10 up to a solid €163.

So what did I miss re. Contactless payments and the imposed €25 limit?
At least not that most of my transactions are above the limit. Neither that I would be less than enthusiastic about contactless if someone imposes usage barriers and complicates my life. Not even the potential confusion at the "moment of truth" when cardholders must choose between tap&go or dip&PIN depending on the amount.

Now, maybe the press release about the new card did not tell the whole story. Maybe the limit only refers to the need for PIN verification of the transaction depending on amount, ie. Allows for contacless transactions without a PIN below €25, and contactless with a PIN code above the limit.

I certainly hope so. Otherwise Carrefour can look forward to some interesting times soon, with confused customers and frustrated employees at the check-out.


  1. Although, your weekly shop may come to an average value of 58 Euros, there are a number of different channels where the average transaction value is significantly below the boundaries. e.g. mobile phone top up, Kiosks, fast food, buying a drink at a bar or the cinema… rather than looking through you receipts to establish how many times you spent less than 15 Euros at a supermarket, it might be a better idea to forget using cash completely for 1 month and only use your card, and then look at your bank statement to see the % of transactions which are below the threshold. It will almost certainly be higher than 20% of your total transactions.

  2. Thanks for your comment. I do agree with you that a lot (most) of our transactions are below the €25 limit, in general. My point re the limitin my blog concerns Carrefour specifically, and a Carrefour branded card for purchases in their store. In that environment, I do not understand the imposed limit, and I have shown why I don't believe it makes sense.

    To the other point you are making (cash vs cards in other channels), I agree that cash is king for a lot of purchases, as you correctly point out. This has been shown in research. I have previously run projects for card-based micro-payments (MasterCard Cash), and have observed what has happened to Moneo in France (the latter being a battling niche product used for pay parking).
    Some questions are:
    - Will contactless card acceptance be widespread such that customers feel there is a significant benefit of having and using a contactless card for small ticket items?
    - Will merhants be willing to pay for card acceptance for such low values (they didn't for Moneo)?
    - Cash is a tough competitor, as it is perceived to be universally accepted, without transaction charges, quick and convenient. Is it realistic to believe that we will make large inroads in the low-value ticket purchases using a card-based payment tool?

    I would be very interested in your comments and thoughts