Tap or Touch?

  Not long ago payment-terminal makers started trying to differentiate themselves by adding bells and whistles to their devices, including support for loyalty and other ancillary programs. When enough merchants didn't bite, the vendors began to emphasize lower-cost machines that supported basic debit and credit card acceptance. In both instances, the goal was to create market churn, as many retailers like their aging, yet reliable, terminals.
  The industry could be facing yet another opportunity to drive sales. As more merchants embrace biometric and contactless payments, expect to see vendors offering terminals with integrated contactless readers and biometric-identification capabilities.
  The question is, should the terminals incorporate both capabilities? There are terminals available that support contactless or biometrics acceptance, but in the next two to three years terminal vendors likely will incorporate both technologies into their devices, says Gwenn B?zard, partner and research director at Aite Group, a Boston-based research and consulting company.
  To date, most merchants accepting contactless card payments are not also accepting biometrics, and vice versa. B?zard says two factors are at play: a merchant's available resources to support new technology and the types of payments the retailer is trying to accommodate.
  Quick-service merchants are among the biggest retail segments embracing contactless, which is designed to get customers initiating low-risk, low-value transactions through lanes faster. Grocery stores, which similarly want faster lines at checkout, have been the biggest backers of biometrics, which can be useful in reducing risk for larger transaction amounts. Moreover, as this month's Cover Story notes, merchants can add electronic checks as a biometric-payment option, which cost less to accept than debit or credit cards.
  Merchants eventually may choose to accept both types of payments. At least one large drug-store chain, which put a biometrics test on hold a few years ago and has since embraced contactless-payment acceptance, is planning to revisit biometrics, B?zard says, declining to name the chain. He says the company had limited resources to embrace both payment types at once.
  While today different merchant segments are adopting contactless versus biometric payments, in the coming years some crossover is likely as retailers examine the benefits of the other technology. An integrated terminal would resolve one potential conflict: which of the two payment options gets space on the checkout counter.
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