Co-op Food places focus on payments and security

A Co-op Food report published last week predicted the demise of cash payments over the next decade, with the retailer saying it expects that 65% of transactions to be conducted via mobile by 2025.

Coming in the wake of last summer's Apple Pay launch and ahead of Google's Android Pay and Samsung's mobile commerce equivalent arriving in the UK later in 2016, the report highlighted how the emergence of NFC technology has led to Co-op stores seeing contactless payments hit almost 11 million transactions in the space of one month.

It is widely predicted in industry circles that consumers' growing confidence about using contactless cards will be a precursor for mobile payments to take off, especially as it functions using the same technology.

In what was an in-depth research piece, the Co-op said despite its growing prevalence there are still consumer concerns over security. A survey of 2,000 shoppers showed a reluctance by some to use the method, with people more likely to use Chip and PIN than the contactless pad for transactions over £10.

The average basket spend for contactless in convenience stores is £8.66 compared with an average of £18.16 when using chip and PIN. The Co-op also revealed that the average spend on customers buying fuel using contactless is £9.38, compared with £23.28 for a chip and PIN purchase – despite the £30 limit which was put in place at the end of summer 2015.

Against this backdrop, and with retailers nervous about the seemingly growing levels of high-profile data breaches around the globe, Co-op has this week announced an investment in its payments security.

The retailer has selected ACI Worldwide to run its card payments processing operations and maximise security across all of its UK food stores and fuel sites, using the latest version of its point-to-point encryption (P2PE) and tokenisation capability.

P2PE converts a consumer's confidential credit and debit card data into indecipherable codes when the card is read by the payment terminal, which renders the sensitive data invaluable while in the possession of the retailer, and is viewed as a way of preventing theft and subsequent fraud.

ACI's system is expected to go live across all stores in early 2017, with the vendor running the service from its European data centre. ACI promises that the service has "scalability and flexibility", meaning it can be adjusted to meet the Co-op's evolving needs.

The move to invest in payment security comes after the Co-op was forced last year to blame "a processing error" for some customers being charged twice while paying for goods and petrol at its supermarkets on 7 July 2015. Shoppers who used a credit or debit card to transact on that day received a double bill.

Cheryl Marshall, retail chief information officer at the Co-op, said this week: "The security of our customers' data is of paramount importance to us.

"We believe ACI Worldwide's UP Merchant Payments solution offers us not only the payment processing power we require, but also the flexibility to meet our needs in the future."

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ACI Worldwide 

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