Home Depot Opens the Door to Big-Box Contactless Payments

MasterCard Inc.'s announcement on Monday that The Home Depot Inc. would accept the MasterCard PayPass contactless card at 1,974 U.S. locations, along with last week's news that sporting-goods chain The Sports Authority also would take PayPass, indicate that the card network is looking beyond the original base of cash-oriented merchants as contactless card acceptors. And to capture more transactions at these higher-ticket retailers, MasterCard this autumn will raise its floor limits by $25. “As more consumers embrace contactless payments for the payment speed and convenience they provide, more merchants in a wide variety of retail environments are recognizing the value of accepting contactless payments,” Cathleen Conforti, senior vice president, Global PayPass, tells Digital Transactions News by e-mail. MasterCard on Oct. 15 will increase to $50 its current $25 limit on transactions where customers don't have to sign for purchases and the receipt is optional, according to Conforti. “For transactions of larger value, customers can still just tap their PayPass-enabled cards or devices on the readers to make payments, rather than handing over their card to a cashier to swipe, thereby still speeding up transactions, and bringing value to merchants like Home Depot by improving customer service,” she says. “They will simply be required to enter a PIN or sign a receipt.” While Home Depot and Sports Authority along with a few other PayPass acceptors such as consumer-electronics retailer Best Buy Co. Inc. all sell low-value items, buying a kitchen cabinet, an expensive tennis racquet, or a 48-inch flat-panel TV is not the type of transaction normally associated with contactless cards. The card networks mostly have promoted contactless cards as payment instruments for small-ticket, high-throughput merchants such as quick-service restaurants, convenience stores, and transit agencies, where transaction speed is paramount. Thus, changing the floor limits so as few customers as possible have to sign receipts is essential if MasterCard and the other networks want to broaden the acceptance of contactless cards, according to Allen Weinberg, managing partner of Menlo Park, Calif.-based Glenbrook Partners. “It would be great if the signature limits were adjusted accordingly so large numbers [of transactions] can make it through with just a tap and go,” he says. A spokesperson for Atlanta-based Home Depot, the nation's second-largest retailer after Wal-Mart Stores Inc., could not be reached for comment. MasterCard would not disclose the manufacturer of the contactless terminals the home-supply retailer will use, or if MasterCard offered any financial incentives to Home Depot, as has been the case in previous merchant installations. As of the first quarter, MasterCard client financial institutions had issued some 55 million contactless-enabled cards or fobs. But MasterCard refuses to say how many merchants accept contactless cards. Researchers had put the number below 200,000 worldwide before the recent MasterCard announcements. MasterCard indicates that it will continue to pursue transit systems, vending-machine deployers, QSRs, and other small-value merchants for PayPass acceptance. But Conforti notes that Home Depot and Sports Authority are joining not only Best Buy, but also Office Depot Inc. and Petco Animal Supplies Inc. in accepting PayPass. “While the initial growth of PayPass contactless payments was seen in small-ticket, traditionally cash-heavy environments, today big-box retailers are recognizing that contactless payments deliver value by making shopping and checkout more convenient for customers,” she says.