Go Sox!

Go Sox!

Days like this are why #September is an amazing month. #kayak #saltwater #chatham #CapeCod #EndOfSummer #memories (at Cotchpinicut)

Days like this are why #September is an amazing month. #kayak #saltwater #chatham #CapeCod #EndOfSummer #memories (at Cotchpinicut)

Late summer sunsets on #CapeCod. #nofilter  (at Bassing Harbor)

Late summer sunsets on #CapeCod. #nofilter (at Bassing Harbor)

Cliffs of Moher, Co. Clare, Ireland (at Cliffs Of Moher)

Cliffs of Moher, Co. Clare, Ireland (at Cliffs Of Moher)

at Glendalough

at Glendalough

Happy Independence Day #4July #Fourth #USA #HappyFourth (at Chatham, Massachusetts)

Happy Independence Day #4July #Fourth #USA #HappyFourth (at Chatham, Massachusetts)

Making a #memory: #Summer on #CapeCod (at Chatham, Massachusetts)

Making a #memory: #Summer on #CapeCod (at Chatham, Massachusetts)

Fountains at Columbus Circle #water #nyc #night #myfirstvideo #instavideo (at Columbus Circle)

Fountains at Columbus Circle #water #nyc #night #myfirstvideo #instavideo (at Columbus Circle)

Why transaction economics matter

And here we have it… the single reason why NFC payments haven’t taken off as a viable Point of Sale payment option. It’s sitting right there and core to the process… frankly, I’m a bit disappointed in myself that I didn’t yet take the analysis to the deep enough level to uncover it.

The NFC payments proponents (of which I’m one) have been describing its “benefits” to merchants in fairly soft terms so far… increased speed at checkout, therefore greater sales, customer convenience, etc. That, with the opportunities to create better payment experiences for the customer should have been enough to drive some adoption. Or so we thought.

But, once again and unsurprisingly, economics are really the heart of the issue. Once you do the math, any perceived revenue gains from increased point-of-sale speed and customer convenience aren’t enough to offset the lost profit from the 5-10% margin hit on small-ticket transactions, of which SMB retailers have many.

If it doesn’t make a retailer more money, they wont do it.

So this means that until the economics of low-ticket transactions change, NFC as a cash alternative will be facing a pretty huge headwind from SMB retailer adoption. And that’s a problem.

One simple way to address this? If MC/VISA change the interchange menu for small-ticket transactions to make it more comparable to higher ticket transactions (the average debit transaction in the US hovers around $45), the equation tilts and the door should be opened for both NFC at the point of sale and $6 debit swipes at the corner deli.

Starting the workday. #Dawn #sunrise #Monday (at Chatham, Massachusetts)

Starting the workday. #Dawn #sunrise #Monday (at Chatham, Massachusetts)