Discover: Contactless Payment Sticker Users Inadvertently Crippling Performance

In a cruel twist of fate, hapless contactless payment supporters (a dying breed if ever there was one) were swiped by some more bad news this week, courtesy of a new report from Discover Financial Services. It seems that in a trial of its Zip contactless payment program, most consumers tried to hide the stickers inside their phones, a move that unintentionally cripples performance.

According to a copy of a report that Discover prepared about its initial trial results, 69 percent of those participating in the Zip trial wanted the sticker hidden.

"The pilot management team was impressed by the creativity demonstrated by participants in finding various ways of hiding stickers under the phone’s protective case ('skin”), under the battery cover and other unseen yet convenient locations," said the card brand's document. "Discover believes these results tie very closely to responses provided when participants were asked what information should (and should not) be printed on the sticker."

Added the report: "Although participants overwhelmingly enjoy the product, they clearly do not want to broadcast that their cell phone is a payment device. Discover suggests that a balance can be struck with subtle branding, by not printing sensitive information such as the account number and cardholder names on the sticker and by creating mobile device accessories that aid in hiding the sticker without negatively affecting performance."

This move comes on the heels of Best Buy cutting off its Visa contactless rollout.

The Discover report also noted that there is a huge difference between the read range capabilities of traditional contactless devices—cards and fobs—and contactless stickers.

Although "cards and fobs readily meet the read range standards set by the payment networks, 4 cm (or about 2 inches), some stickers have difficulty achieving these standards depending on the mobile device that the sticker is attached to and/or the contactless terminal being used," the Discover report said. "It is important to note that this discrepancy in read range does not mean that the stickers are not ready for consumer use or that they are unreliable. It only means that issuers must take more care to select a sticker that has been tested and approved by its payments network partner to ensure consistent results in a wide variety of environments."

The report included a chart that matched various kinds of contactless stickers with various kinds of phones. No surprise, but the weakest range (from one-fifth of an inch to almost no distance at all) was associated with a handset with a metal casing. But even with the metal cased phones, at least one contactless sticker could be read at almost 0.7 inches and a little more than 0.8 inches, suggesting that the sticker choice itself can have a profound distance impact.

The other sticker/phone combos varied sharply, from about one-third of an inch all the way up to about 1.82 inches, which is still shy of the 2-inch target but just barely.

The move has the potential to further undermine contactless' argument that it improves convenience. We envision wary, sticker-hiding customers waving, waving, waving their phones over contactless payment devices that can't read the surreptitiously-placed labels. There goes one of the big selling points of contactless, that it is a speedier way than swiping a card to pay at the POS.

Those consumers who tucked away their Zip stickers inside metal mobile devices suffered the biggest performance decline. But Discover found that blocking the contactless card from the phone's circuitry, through the use of a metallic shield, improved the hidden cards' readability.

The Discover document said the most popular sectors for contactless payment are likely to be fast food, convenience stores, discounts stores, gas stations and supermarkets.