Courtesy of Payment News, FT reports that the costs associated with expanision of Oyster stored value cards, to cover other small payments has been dropped because its too expensive. Oyster has a proprietary POS terminal.

FT.com / World / UK – TfL drops proposal to expand Oyster card use

The transport agency had hoped to roll out a service this year that would have enabled passengers to use their Oyster cards – currently used on the London Underground, buses, and some trains – to buy low-value goods such as newspapers, coffee and sandwiches with “electronic money” that would be loaded on to the card in advance.But the transport agency said that setting up a link with a bank or financial services partner had so far proved too expensive.

The credit card companies in association with the big payment networks have a lock on this infrasctrucure because the costs associated with building a new network and acquiring devices (POS terminals) is simply prohibitive. It also doesn’t make sense otherwise you end up with the ludicrous situation shown in this picture from Thailand, that shows six separate acquiring terminals on the merchants desk. You’d have to be a computer scientist to work as a clerk there!

This problem applies to Dexit in Canada. They have a good business model, using a contactless key fob, for purchasing coffee, newspapers, lunch etc. They are destined to fail though, because merchants will not accept more terminals on their already crowded counters, where they would rather display last minute purchase items. Dexit have a few merchants, in Toronto, but after several years, its hard to consider this widespread uptake.

The better approach would be to lever the existing networks. This minimises costs, and simplifies the merchant processing end. It will increase the development/ software side of things, but in the long run that sounds more appealing. This is the approach taken by Cardis which offers micropayment capability, levering the current POS terminals.

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