Forget the credit card, and the app: Coles wants to let you pay with a sticker

Wallets could soon be a thing of the past at Coles, as the supermarket giant trials a new payments system that could see customers paying for their groceries with just a swipe of their phone.

The Coles Pay Tag is a 2cm by 1.5cm card that Coles wants customers to attach to the back of their phones.

The MasterCard-encrusted chip has been sent to 5000 customers around the country, who will be asked for detailed feedback.

Coles finance director Rob Scott said in a statement the supermarket’s customers are on the lookout for ways to “simplify their lives, save time and effectively manage their finances”.

“It doesn’t matter which phone you own, the Coles Pay Tag will make earning Flybuys rewards and the PayPass feature of the Coles MasterCard easier [to use] than ever before.

“We believe there is a significant opportunity for Coles to deliver Australian consumers further innovation in financial services,” he said.

Kristin Alford, a futurist at Bridge8 and sessional lecturer at the University of Adelaide, told SmartCompany that the drive towards contactless payment is very much driven by customers.

“It’s meeting a consumer need, or desire, for transactions at point of sale to be faster, to contain hassle, and to waste less time,” she says.

By speeding up point-of-sale transactions, they also have the potential to increase the productivity of sales staff.

The current trend is towards such transactions taking place via smartphone, using the near-field communications capabilities people carry around in their pockets.

This has sparked a scramble amongst the major global financial institutions to secure their ownership of such payments technologies, Alford says.

But the field is being disrupted by new players like PayPal’s Beacon, which launched last month offering the same technology with far lower fees than those traditionally associated with merchant credit card usage.

Australians are world leaders when it comes to the take-up of such technologies, Westpac data shows.

Westpac chief product officer David Lindberg recently said the number of contactless transactions had gone from virtually zero before 2010 to more than 35 million per month in Australia today.

Lindberg said he had never seen consumers change their behaviour so quickly, while ANZ’s Mike Smith has described the possibility of competitors like Google or eBay to take business away from the banks by introducing their own contactless payment systems as “terrifying”.

But a major deterrent to the growth of such payment technologies is the level of concern about their security.

“Consumers are happy to make trade-offs between security and access. I mean, look at the data we give to Facebook in exchange for a service,” Alford says.

“The same thing applies to payment technologies like Paywave. The perception, and the reality, is that they’re not terribly safe, with no pin or signature required. If someone takes your wallet, they can use it without too many checks in the system.

“But the financial institutions are looking at how to protect themselves from such risks.”

Small businesses have generally lagged in their adoption of contactless payment technology, Telsyte research director Foad Fadaghi recently told SmartCompany.

“Not all businesses have these facilities yet, and there are still some issues around what the value for merchants is at the moment, and whether it’s worth having that technology operate in stores,” he said.