November 04, 2006
Good or Bad: Small-Transaction Contactless Payment
[Commentary] When small-ticket vendors start accepting contactless payment, it makes me wonder what it does to the cost of living. I have a hard time believing that USA Technologies' decision to install OTI (On Track Innovations) contactless card readers on 10,000 of their vending machines is a good thing for the average consumer. I'm of the same opinion for the drive to capture the sub-$25.00-per-transaction market of small merchants and convenience stores - places where profit margins are already tiny, and the market is competitive. [I.e., I'm not picking on USA Technologies in particular.]
This technology obviously isn't free, and the likelihood that it costs more than regular vending machines is high. That means the product being sold is going to have to increase in price at some point. So how is that a good thing for customers? And let's not forget that criminals already target various isolated places by installing fake debit or credit card readers. What happens when they do the same for contactless payment cards. Researchers have already shown that some of the current generation of contactless (credit) cards (and e-passports) are susceptible to security flaws.
If it ain't broke, don't fix it.
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