Critical Mass (Market)
And, looking in people's wallets these days, most of them have something in common: credit cards. Dexit may have just been ahead of its time, as micropayment, chip-enabled, and contactless cards are finally making small inroads due to that customer-coveted all-in-one appeal, courtesy of the big boys - Visa and MasterCard. With them on your side, it's easy to reach that critical mass that Goodall mentioned.
One of the key success factors is that they already have a gigantic subscriber base, and the cards are already in their pocket or purse. "There has been some restructuring of the financial sector and banking that makes contactless payments more attractive to the card companies and banks, and there has been some standardization around RFID. The readers are also cheaper now," said Goodall.
MasterCard got in there first with its PayPass, a mag-stripe-based card that a user taps to the terminal for purchases up to $50, which has been rolled out to several large chains, including the coup of landing their machines in Tim Horton's, and Loblaws, along with other small-ticket vendors.
Visa has the PayWave card, which, along with other card chip-enabled card brands, is undergoing a trial-run in the Kitchener-Waterloo area, and sees the user inserting it into a reader for purchases up to $25. Duynhoven said that several quick-service restaurants and larger national merchants have expressed interest in the TD-branded Visa PayWave technology so far.
Said Gartner Research senior analyst Ben Pring: "If you look in your crystal ball, in ten to 15 years, it will be ubiquitous, but between now and then is a long journey. Dexit was probably ahead of the curve - there's always entrepreneurs who get the timing a bit wrong."
Even in the future, though, it could be tough for the little guy to make a go of it in a space so thoroughly dominated by a few companies with such global reach. Burbach said Dexit-like technology could be used as a niche application for something like a customer loyalty program where the key could act as a points collecting device. "But it's very difficult for a small outsider to make it (alongside the big boys)," Goodall said. "It's hard to imagine anyone doing it."
Said van Duynhoven: "It's the fundamental difference: the consumer experience is identical, and there's already a relationship."
Making IT managers pay
There's another blossoming relationship here, too: that of micropayments and the IT manager. It shouldn't be too stressful, however. "Unless you work for Visa or MasterCard themselves, it won't really be your problem." Goodall said, "Most of the infrastructure issues happen on the provider side with the banks and credit card companies. It'll be more the financial department than IT, unless you do IT for accounting. The only thing they might be involved in is any sort of reporting or invoicing software."
IT managers might have to bone up on the issues that go hand in hand with the new chip cards on the horizon, according to Burbach. "You need to think about what else you can do with these cards," he said. "You can start a loyalty program, or do some enhanced reporting and tracking. There are data implications from that on the back-end. If you're collecting all this data, you need to know what to do with it."
Oh, and one more thing, said Goodall: "If you're an entrepreneur, stay away from micropayments!"