Since April 2009 the payments network has been running an internal pilot designed to find out how US consumers would respond to the introduction of mobile contactless stickers — with some surprising results.
Discover Financial Services has published key findings from a trial of a mobile sticker version of its Discover Zip contactless card, conducted since April 2009 with more than 700 Discover employees at its Chicago headquarters and its facility in Salt Lake City.
Although the pilot involved Discover employees only, the company explains that it "recognises that consumer opinions may vary as compared to the employee base; however, there are significant technical and operational lessons that will clearly apply to, and benefit, nearly any contactless sticker program."
To begin, Discover mailed out one sticker linked to an employee's existing magnetic stripe card account via US mail to each participant. Participants at Discover's Chicago campus, which is fully contactless-enabled, could use the stickers at the cafeteria, two convenience stores and more than 40 vending machines, as well as at any of the 60,000 points of sale in the US that are equipped to accept Discover Zip contactless card payments.
One of the key things Discover wanted to learn from the pilot was whether customers would actually place the stickers on their phones, or if they would attach them to other personal items. "In our enrolment offer, instructions purposely offered vague guidance in describing what items the stickers could be attached to," the white paper explains.
"We quickly learned, however, that some instruction was required in order to get participants to enrol," it continues. "Updated instructions were developed as follows: 'Place on personal devices such as your mobile phone, PDA, Discover ID badge, or any other personal item that is always at hand.' The instructions also stated that this is a payment device and that the sticker is tied to your credit card, and should be treated as such."
When participants were polled on where they had decided to place their sticker, one surprise was that 32% had placed it on their company ID badge. "Pre-deployment assumptions believed that the vast majority of stickers (80-90%) would be placed on phones and PDAs," says Discover. In fact, only 44% placed it on their cellphone or PDA. A further 13% chose to locate it on or in their wallet and 11% chose a different place.
"Employees quickly determined that placing the sticker on their corporate ID badge meant they could go nearly anywhere on campus and purchase items without their wallet or purse," says the white paper. "Although the intent of this pilot was not to test a multi-application contactless device, Discover found that the combination of corporate identification card and payment device was very attractive for employees."
Six months into the trial, Discover polled participants to find out their opinion of the service and to identify how they were using their stickers. Key findings included:
- When asked which merchant categories are best suited for Discover Zip, there was interest in virtually every spending category. Five clear favourites emerged, however: Fast food, convenience stores, discount stores, gas stations and supermarkets. One quarter of participants also wanted to use their sticker everywhere they shopped.
- 78% of participants would use their sticker more if there were more merchant locations at which to use it, whilst 29% indicated that they would want to see the sticker in a different form factor to use it more. 10% responded that they already use it every chance they get.
- Pilot participants strongly felt that information such as account number, expiry date and cardholder name should not appear on the stickers since a common location for consumer placement will be a mobile phone or handheld device, thus making the information easily seen by others. "While participants overwhelmingly enjoy the product, they clearly do not want to broadcast that their cell phone is a payment device," says Discover.
- Nearly half of those surveyed would like to receive an additional sticker at no cost. The primary reason for a second sticker at no cost was for placement on a second phone, PDA or MP3 player for added convenience. The second most common reason for desiring another sticker was to provide the same payment device for a spouse or significant other. Providing stickers to children was not a popular response — an expected outcome, since the pilot used a credit rather than a prepaid product.
- The vast majority (90%) of employees stated that the activation was easy and completed with one call, and 78% found the stickers either easy to use from the first use, or easy after using them only a few times.
In the white paper, Discover explains that it sees a number of benefits to using contactless stickers as a first step towards a future NFC-based payments service:
In stark contrast to the NFC conundrum, contactless stickers can be deployed immediately since they are not dependent on other technology advancements or business model reconciliation, and they do not require new participants in the value chain. They are also fulfilled in much the same way that magnetic stripe and contactless cards are fulfilled today, offering the opportunity for relatively fast deployment.
The stickers are 'carried' through standard card personalisation and fulfilment equipment on an ISO-sized card, and mailed to cardholders who can either snap them out of or peel them away from the ISO card. The stickers are activated in exactly the same way as traditional magnetic stripe cards, helping to simplify the consumer education process.
Better news yet is that most major card personalisation bureaus offer this service today. In short, stickers allow for standard (existing) deployment options, they require minimal consumer education to help foster adoption and usage, and they can provide the ultimate in convenience for consumers who have complete control to determine placement onto personal devices or accessories that are always in hand.
"Discover believes that while NFC mobile commerce will ultimately revolutionise the way payments are made, it will not be widely available for several more years," the white paper concludes. "In the meantime, the contactless sticker can help build near-term transaction volume and a top-of-wallet position for issuers while advancing consumer awareness of contactless payment options. And while multi-card wallets, reward redemption, and other mobile products that NFC enables are the end-goal, Discover believes that stickers are also an important first step towards mobile commerce, and that first movers will reap rewards for launching them sooner rather than later.