Amex Kills Its Payment Fob. Will Others Follow?

Pushing a convenience/ease-of-use argument, payment processors have spent much of the last two years trying to get consumers to use different payment methods. But 2008 has thus far not been friendly to them.

The once-promising biometric authentication (which said the greatest convenience is using fingers, which are quite handy) effectively died with the death of PayByTouch this year. Contactless payment, which is one of the things that killed biometric payments, is having problems of its own, with persistent security problem reports, questions about how well they work and issues about whether most contactless-payment-owning consumers even know that they're carrying them.

This week brings the news that American Express is halting its ExpressPay keyfob, some six years after the payment giant started offering it. The program is expected to deactivate the last of its fobs by July.

There are many reasons the fob may have died, but at least Amex—with six years of fob effort under its payment belt—can't be accused of not giving the fob enough time to work. If one wanted to point the finger at Amex, the worst that could be said is that it didn't provide much marketing support for the device nor any financial incentives for cardholders to use it. What might be an attraction of the novel for the typical PayPal pay would be seen more as the fear of the unknown for a traditional Amex aficionado.

The convenience argument also fell flat under realworld conditions. Consumers typically had to grab the fob key chain from their pocket and then fumble to bring the fob to the front and then to be scanned. For many, it's simply faster—and more comfortable—to grab their credit card. At best, it wasn't a material time or effort saver.

The security issues were not likely a consumer factor as the nature of the device itself undermined its convenience pitch.

It's important to note what contactless has worked. EZpass, the tollbooth payment system, is a fine example and much of it is because it is positioned so the user has to do nothing at all. On top of that, it truly does the payment a lot faster than other methods and it also offers automatic toll discounts. A triple play: true concrete time-savings; absolute ease-of-use; and no-games discounts. On top of that, marketing makes the case clear, with lots of big signs and EZPass-only vehicle lanes. So they even get the marketing right.

As the next wave of payment form factors come into play—and you can bet mobile will try to play a crucial role—it's important to focus on those issues as you decide what to support. Consumers are resistant to change unless you give them a reason to change. The fob seems to not be cutting it.