Chronometric Analysis of a Payment Process for Cash, Cards

and Mobile Devices

Michał Polasik

, Jakub Górka

, Gracjan Wilczewski

, Janusz Kunkowski

, Karolina Przenajkowska

and Natalia Tetkowska

Faculty of Economic Sciences and Management, Nicolaus Copernicus University, Gagarina 13A, Toruń, Poland

Faculty of Management, Warsaw University, Szturmowa 1/3, Warsaw, Poland

Keywords: Retail Payments, Tender Time, Credit & Debit Cards, Contactless Cards, NFC, Mobile Payments.

Abstract: This article presents estimates of the time efficiency of a wide range of payment methods used at the Point-

Of-Sale (POS) from traditional cash and standard cards to contactless cards, RFID stickers and mobile

payments (NFC and remote). More than 3,700 transactions were timed by means of digital chronography of

video material recorded by cameras installed in the biggest chain of convenience stores in Poland. Our novel

approach confirms that until recently cash was the fastest payment method available at POS. Traditional

payment cards equipped with a magnetic stripe or EMV chip are significantly slower at the checkout.

However, nowadays a technological breakthrough occurs in the evolution of means of payment. The

innovative payment methods designed for low-value transactions, such as contactless cards and NFC mobile

payments, are competitive to cash in terms of time efficiency. Contactless cards used in offline mode and

without printing paper slips are the first popular electronic payment method in history faster than cash.

Conversely, the remote mobile payments method tested has lower time efficiency at POS. Our results could

be used by merchants who want to optimise their payment process and by developers of innovative payment

solutions.

1 INTRODUCTION

The modern retail payment market offers a wide

range of payment methods which may be used at the

Points-Of-Sale (POS), such as cash, cards, cheques

or currently even mobile devices. Payments at

physical POS have an important impact on the entire

economy, as they are a daily activity of consumers.

Consumer’s choice of a payment method is

influenced by numerous factors which inter alia

comprise its pecuniary cost of use, convenience and

certainty of acceptance (Bolt et al., 2009); (Górka,

2009). Individuals must have compelling reasons to

change their payment habits. Otherwise they keep

using means of payment they are most familiar with

(Borzekowski and Kiser, 2008). Consumer

satisfaction from the purchase depends heavily on

the time of queuing and the time of undertaking a

transaction at the counter (Barclays Bank, 2010);

(Womack, 2010). As a consequence of strong

competition in retail trade, aspects of payment costs,

sales organisation and the length of queues have

great impact on profitability of merchants business

and their market success. Modelling the flow of

customers and the time spent by them while paying,

may result in decreasing queues which is

advantageous for both merchants and consumers.

The main aim of our study was to measure the

time efficiency of different payment instruments

used at physical POS in Poland. The time efficiency

of payment methods understood as the speed of the

transaction process has been evaluated on the basis

of empirical research that was conducted in the

chain of convenience stores. We were willing to

verify whether new payment solutions like

contactless (proximity) cards, RFID stickers or

mobile payments – the remote system and NFC

mobile phones – were faster in a transaction process

than traditional payment methods – cash and

standard debit and credit cards.

To the best of our knowledge, this is the first

study in the world to gauge payment process time

components of a wide range of payment methods

used at POS.

220

Polasik M., Górka J., Wilczewski G., Kunkowski J., Przenajkowska K. and Tetkowska N..

Chronometric Analysis of a Payment Process for Cash, Cards and Mobile Devices.

DOI: 10.5220/0004004202200229

In Proceedings of the 14th International Conference on Enterprise Information Systems (ICEIS-2012), pages 220-229

ISBN: 978-989-8565-11-2

 2012 SCITEPRESS (Science and Technology Publications, Lda.)

2 IMPORTANCE OF

TRANSACTION SPEED AT THE

CHECK-OUT

The speed of the payment transaction process is of

major importance for the efficiency of a given

instrument. Time of servicing a payment transaction

by a seller should be treated as a part of merchants

costs. Garcia-Swartz et al. (2006a and b) label these

costs as ‘tender time costs’. They are a part of front-

office costs and are usually translated to staffing

costs at the average wage rate for shop workers

(Brits and Winder, 2005). Thus, the time of a

transaction at the check-out constitutes an important

part of merchants costs. Moreover, time spent on

paying and queuing implies consumers cost. A

reduction of queue lines can therefore decrease

consumers costs of payment (Brits and Winder,

2005). At the same time – from the merchants’

viewpoint – reducing lines in shops through the

shortening of the payment process may boost sales,

because fewer clients will withdraw from the

purchase. This element gains significance because

consumers become more demanding. Research

published by Barclays Bank and Populus Ltd in

2010 shows that customers are unwilling to wait in

line to pay for their shopping. Two-fifths of the

shoppers refuse to wait in queue for more than two

minutes while two-thirds regularly abandon

purchase (Barclays Bank, 2010). It shall be noticed

that the importance of the transaction speed varies

depending on the sector – it is of key importance

during mass events, in public transport or fast-food

chains and less in luxury boutiques or restaurants.

In addition, speed can contribute to the market

success of a new payment instrument, therefore this

feature can be vital for payment providers. Studies

conducted worldwide have shown that the speed of a

transaction, determining time spent at the counter, is

one of the most significant factors determining the

choice of a payment instrument (Jonker, 2007);

(Klee, 2006, 2008); (Schuh and Stavins, 2010); (von

Kalckreuth et al., 2009); (Zinman, 2009); (Polasik

and Maciejewski, 2009); (Polasik et al., 2012). In

particular young clients negatively react on longer

executing times of executing a payment

(Borzekowski and Kiser, 2008). This suggests that

instruments requiring more effort on the consumer’s

part have little chance of gaining popularity.

Due to their physical and technological features,

which are the most important for the presented

study, payment instruments can be divided into three

groups: (a) paper instruments: cash (banknotes and

coins) and cheques, (b) cards: debit, credit, pre-paid

and e-purses (electronic money), and (c) mobile

devices working in remote schemes and proximity

schemes. The usage of these instruments is much

diversified across countries. However, even in

countries with several decades of experience in card

use, cash still remains the main form of payment.

According to McKinsey (2005), cash was used in

70-93% of the total number of retail transactions

concluded by households in the most important

western economies in 2005.

Recently many new solutions have been

introduced to the market, which can become

competitors of cash at physical POS. One of the

most important innovations are contactless cards.

Contactless payments are based on an extension of

RFID technology (Radio Frequency Identification)

enabling remote reading of integrated circuits via

radio waves (Hancke, 2008). The first application of

this technology for payments took place in 1997 for

the Hong Kong’s public transport network (Lefebre,

1999), and first contactless payment cards for more

general banking purposes, MasterCard PayPass,

were issued in United States in 2002 (Capizzi and

Ferguson, 2005). In Poland, this technology was

pioneered by Bank Zachodni WBK SA in December

2007. In 2011 Poland became one of the leading

contactless market in Europe. Most of the

contactless card are issued in traditional form,

however other forms, like RFID stickers for mobile

phones, wristwatches or keyfobs, are also applied to

a limited extent and they

operate similarly to

contactless cards. The more advanced contactless

mobile payment technology, i.e. NFC (Near Field

Communication is an expansion of RFID

technology, complimentary to contactless card; see

Hancke, 2008) can also work similar to a contactless

payment card. However, NFC has much more

features based on mobile device, and one of them is

optional activation using a PIN code. Mobile NFC

payments and contactless cards use the same

contactless POS terminals network, what generates

the synergic effect. The main obstacles for market

development is a very limited number of mobile

devices equipped with NFC technology. As a result,

NFC mobile payments have not been commercially

deployed on a large scale except Japan and South

Korea.

An alternative solution, which can be used in

POS transactions, are remote mobile payment

systems. These systems are based mostly on

universal communication through the GSM mobile

network (most often through SMS or USSD

sessions) or mobile Internet. The versatility of these

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Table 1: Overview of estimates for the duration of the payment process by instrument [in seconds].

Instrument USA

Belgium

Netherlands

USA

Cash 34.75 32 19 33.7

Credit card (traditional contact technology) 55.13 56 28

26.7

Debit Card (traditional contact technology) 50.43 39 26

E-purse (contact microchip technology) – 20 14 –

Contactless card (RFID technology in on-line mode) – – – 12.5

Checks 77.53 – – –

Klee (2006): Data represent the estimated minimum time at the checkout counter for four items purchased at a supermarket (see

Borzekowski and Kiser, 2008). The time for the transaction is the “ring time”, which is calculated as the number of seconds between the

first item crossing the scanner to the close of the cashier’s drawer – the amount of time the cashier spends ringing up the transaction (see

Klee (2006) for a detailed study of consumer response to time at the checkout counter).

Quaden (2005): The Belgian Federation of Distributors (FEDIS) carried out a study of the time taken to pay for purchases with different

payment methods - cash, electronic purses, debit cards and credit cards – in about 10 distributors. It weighted the average settlement times

for the different distributors according to their turnover.

Brits and Winder (2005): The time of processing the payments is defined as the length of time between the moment the customer has

been informed of the balance due and the moment the sales slip, change etc. has been handed to the customer. The time spent by a cash-

register attendant ringing up individual items is not included, since in the study these activities, though necessary to complete a transaction,

are not treated as payment activities. In the Cost Survey by the Nederlandsche Bank it was assumed that the duration of the payment

process are typical for POS.

Smart Card Alliance (2004): Estimates were performed for the transactions at pharmacies based on data from American Express and

CVS/pharmacy. This data should be treated only as approximate.

solutions results from that the acceptance of

payment is possible through an adapted POS

terminal, a WEB-terminal (online payments), or a

seller’s handset. There are many more or less

successful remote mobile payment schemes

operating in the world today, a majority of which

use the GSM technology and/or an installed

application. Most of them are domestic systems,

including Obopay and PayPal (USA), mChek and

PayMate (India), M-PESA (Kenya), MoneyBox

(Nigeria), and mPay (Poland) to mention the popular

ones. Some of the above mentioned payment

innovations could have potential in accelerating the

payment process.

Several studies on the speed of payment

transaction with different instruments have already

been undertaken. Results of the most significant or

most widely cited, are presented in Table 1. There

are quite significant discrepancies in transaction

times among studies due to methodology used. Klee

(2006, 2008) in the USA and probably also the

Belgian study (Quaden, 2005) focused on the time of

a payment transaction comprising ringing up items.

The Dutch estimates did not include this stage.

Transaction times for Netherlands are therefore

shorter across all payment instruments. With the

exception of the Smart Card Alliance approximate

data, all other studies point out that cash is faster

than traditional payment cards. According to Dutch

and Belgian studies the fastest payment instrument is

an electronic purse (Brits and Winder, 2005);

(Quaden, 2005). Note that none of the analyses split

the transaction times into stages. This subject thus

requires more detailed investigation. The presented

study sheds light on the duration of particular stages

of payment transaction for many payment

instruments, not only traditional ones but also new

and innovative.

The Smart Card Alliance study suggests that the

new contactless technology is advantageous,

because proximity cards have potential to facilitate

much faster transactions at POS than cash and

traditional cards. Owing to the fact that the

contactless technology develops quickly in the USA,

many Asian countries and lately also in Europe

(Polasik et al., 2012), verifying the time of the

payment transaction performed with proximity cards

was therefore one of the goals of this research.

3 RESEARCH METHODOLOGY

AND OBTAINED DATA

Empirical research was based on chronography of

the purchase transaction process at cash registers

with the help of video monitoring during regular

work hours of shops and test transactions after

closing time. In this work we will mainly focus on

the results concerning duration of payment

transactions at the checkout. Our research covered

all payment methods available in Poland that can be

used at POS as well as new solutions that stand a

great chance to become popular on the market. Thus,

we have not only tested basic payment instruments

but also evaluated the uncommon innovative

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222

payment methods. The final set of payment method

was following: cash, traditional card with signature,

traditional card with PIN code, contactless card in

online and offline mode, RFID mobile sticker, NFC

mobile payment with PIN code, and remote mobile

payment (exampled by mPay

In order to provide full complexity of the

payment process we have taken under study three

modes of measurement: (1) regular flow of

customers; (2) mystery client tests (testers using

given payment instruments queuing among regular

customers); (3) closed tests (testers only, after shop

closure). In the process of a payment we investigated

the time of queuing and the time of a purchase

payment gauged from the moment of presenting

merchandise by a client to a cashier until

consummating the payment and handing out

receipts. Every payment method has its own specific

series of time components, although some of them

may be the same – like for example the scanning of

items. Nevertheless, the time components vary

considerably among payment methods. In the case

of cash we have: scanning of items, taking out and

counting money by a consumer, taking money by a

shop assistant, giving back the change with receipts,

whereas in case of a payment card verified by PIN

we can observe the following stages: scanning of

items, card preparation by the consumer, terminal

activation and card handling by the cashier, entering

the PIN code on a PIN-pad by the consumer, slip

printing and handing it out to the consumer. Every

time a given stage had to be precisely defined and

measured.

The empirical data for the study was gathered

between the 19

and the 21

of November 2009 in

Torun, a Polish city, in a number of convenience

stores. More than 30 people were directly engaged in

the process (testers, pollsters, organisers and

technical support). 3,728 different transactions and

tens of thousands of particular time elements for all

analysed payment instruments were observed.

After the completion of the process of tests and

recording the video, the chronography stage began.

The team of IT specialists developed a dedicated

computer program Chrono-Metrics which facilitated

measurement of all transactions and its time

components based on the recorded video material.

mPay is a remote mobile payment system based on

telecommunication connections in GSM standard – text USSD or

voice IVR. It can be used on any mobile phone without having to

install additional software. A transaction is performed by entering

text codes on the mobile. mPay mainly works as an electronic

purse and payments can be made to merchants as well as to any

mobile phone user.

95 qualified trainees took part in measurement

which lasted for more than 2 months. Each

transaction in every shop was on average measured

by 5 people in order to minimize errors. Eventually

the set of raw data was collected and, after

controlling errors, average times of transactions of

payment instrument were calculated. During this

process the average starting and ending time points

for all stages of the payment were determined (see

Figure 2 and Figure 3).

One has to be aware of the limitations of the

study, that presents results typical for transactions in

the Fast Moving Consumer Goods sector. Therefore

it is advised to carefully make generalizations of the

results for other sectors.

4 EMPIRICAL RESULTS

The obtained results confirmed the dominance of

cash in retail POS transactions in Poland. In the

regular flow of customers, 94.3% of transactions

were made in cash and 5.7% with standard payment

debit and credit cards. All the other payment

methods could only be examined during mystery and

closed clients’ tests. Nevertheless it was confirmed

that the structure of POS payments in convenience

stores was roughly identical with the structure of

payment estimated for all sorts of shops in Poland

(McKinsey, 2009); (Polasik and Maciejewski,

2009).

The detailed empirical data gathered in the

process of chronography allow to conduct an

analysis of all time components of the purchase

payment process using multiple variable dimensions.

In this paper, we decided to concentrate on the

comparison of the time process of payments using

three approaches which have very important

practical value (Figure 1). The first takes the

perspective of a consumer, the second of a merchant

and the third is a ‘pure’ payment process (without

non-payment components of the purchase

transaction). From the consumer perspective, the

transaction starts with the preparation of a payment

instrument or with passing items to the salesperson

and ends with the moment when the consumer walks

away from the counter. In the view of a consumer,

the whole time devoted by him to the execution of a

payment is important. The chart below (Figure 1 on

the left side) demonstrates the times of payment

transactions for different payment methods from the

consumer viewpoint. The second chart (Figure 1 in

the middle) presents the merchant perspective –

from the moment of a beginning of items’ scanning

ChronometricAnalysisofaPaymentProcessforCash,CardsandMobileDevices

223

Figure 1: Average duration of a purchase transaction by payment methods [in seconds].

*Due to the lack of a sufficient number of observations for contactless cards in an offline mode without printing paper slips, the time for

this payment method was estimated on the basis of simulation procedure. **By analogy to contactless cards, the NFC mobile payment with

PIN in offline mode and without slips printed would be shorter by about 13 seconds.

(customer service) to handing out receipts to the

customer. For the merchant, the full time of a

salesperson’s activity is important. The third chart

(Figure 1 on the right side) exhibits the ‘pure’

payment process, which begins with the preparation

of a payment instrument and ends with handing out

receipts to the customer. The summary statistics for

the duration of a purchase transaction by payment

methods are presented in Table 2.

It is evident that for all payment instruments the

duration of a transaction is the shortest in the third

approach. In the merchant perspective approach,

times of transactions are a bit longer. They are the

longest from the consumer perspective. The

differences arise from the fact that moments of start

and stop are not the same. It should, however, be

kept in mind that the different stages of a transaction

process can overlap. For instance, the customer

usually starts preparing the payment instrument

while items are still being scanned. Therefore it

cannot be stated, as other studies suggest (e.g. Brits

and Winder, 2005), that the pure payment process

excludes completely the time of ringing up

items.The merchant perspective approach is the most

methodologically comparable to the study by E.

Klee (2006). The length of time of the transaction in

her work was evaluated on the basis of scanner data,

containing the records of a store register receipt with

a time stamp, as well as information on the number

of items bought, the value of the sale, the number of

the store and the payment type used, etc. The results

calculated for purchases of four items (see

Borzekowski and Kiser, 2008) are comparable to the

results presented in our work, as the typical basket

of goods acquired in the examined stores consisted

of three items. In fact, our results for the merchant

perspective (Figure 1 in the middle) and Klee’s

results (see Table 1) for the duration of cash and

traditional card transactions are very similar.

A first interesting empirical result (Figure 1) is

that in convenience stores cash still stands out as

faster than traditional cards (either confirmed by PIN

or with signature). The cash payment is especially

short from the perspective of a merchant and in the

pure payment process. Usage of traditional contact

cards increases the time spent by a consumer at the

counter by about 50%. Such a significant difference

in duration of a payment transaction (about 20

seconds) may also have an effect on the queue when

most clients decide to pay with their traditional

cards.

From the consumer perspective (Figure 1),

payment by cash and contactless card in online

mode (as well as by other RFID instruments) are

equally fast

. As far as the merchant perspective is

concerned, cash payment takes marginally less time.

However, when used in online mode contactless

cards do not exploit their full technological

advantage. In fact, when using contactless cards in

offline mode with abandoning slip printing, it

appears that transaction with a contactless card lasts

significantly less than cash transaction (on average

12.3 seconds less in the customer perspective). Thus

it seems that declarations of card issuers that usage

of contactless cards may shorten queues in shops are

true (see Table 1). The possibility of cutting down

the time of a transaction arises from two sources.

The application of offline mode instead of online

mode for card payments generates average time

Differences in the average duration of transaction between cash,

contactless card (online mode), RFID mobile sticker and NFC

mobile payment with PIN (Figure 1) are statistically insignificant

from the consumer perspective (see Appendix).

39.61

59.15

56.29

40.19

27.37

38.52

38.95

68.16

0 255075

cash

traditional card with

signature

traditional card with PIN

contactless card - online

contactless card - offline

without slips*

RFID mobile sticker - online

NFC mobile payment with

PIN - online**

remote mobile payment

seconds

33.34

49.02

51.41

38.53

25.71

36.85

37.91

62.80

0 255075

Consumers perspective Merchants perspective

28.86

40.26

48.04

37.08

24.26

29.45

31.70

58.51

0 255075

Pure payment process

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224

Table 2: Summary statistics for the duration of a purchase transaction, by payment method [in seconds].

Payment instrument Mean Median Minimum Maximum Standard Deviation Sample size

The consumer perspective

cash 39.61 33.32 4.75 244.35 25.35 2577

traditional card with signature 59.15 49.93 28.01 216.40 36.41 30

traditional card with PIN 56.29 48.30 29.21 155.18 22.43 186

contactless card - online 40.19 37.06 21.84 134.73 12.54 146

RFID mobile sticker 38.52 37.43 29.61 52.35 4.84 26

NFC mobile payment with PIN 38.95 39.01 32.64 43.75 3.06 14

remote mobile payment 68.16 58.76 38.26 165.64 28.44 52

The merchant perspective

cash 33.34 27.59 5.35 192.26 20.73 2577

traditional card with signature 49.02 40.72 24.21 200.43 32.67 30

traditional card with PIN 51.41 44.48 16.71 150.81 19.96 186

contactless card - online 38.53 35.95 21.00 130.13 11.63 146

RFID mobile sticker 36.85 36.26 28.51 49.54 4.38 26

NFC mobile payment with PIN 37.91 38.01 31.97 42.18 2.85 14

remote mobile payment 62.80 54.82 36.29 152.69 24.05 52

The ‘pure’ payment process

cash 28.86 25.24 2.82 158.59 16.08 2577

traditional card with signature 40.26 36.26 21.60 75.89 13.96 30

traditional card with PIN 48.04 41.60 15.39 140.03 19.95 186

contactless card - online 37.08 30.95 14.66 128.11 14.64 146

RFID mobile sticker 29.45 28.70 22.34 35.73 3.49 26

NFC mobile payment with PIN 31.70 30.75 24.58 36.16 2.95 14

remote mobile payment 56.51 50.31 33.49 146.46 22.41 52

savings of 6.61 seconds. Offline transactions are

recommended by payment organisations for

contactless cards, and since 2010 most such cards

issued in Poland are offline mode enabled. Polish

merchants are accustomed to regulations requiring

the printing of two paper slips for card transactions.

However, we estimated that printing them lasts on

average 6.2 seconds. Consequently, changes of

payment organisation rulebooks, which allow not to

print paper slips for low value payments, might lead

to a further speeding up of contactless card

payments. Therefore, we observe a technological

breakthrough, because for the first time in history an

electronic payment instrument that turns out more

time-efficient at the POS than cash, is being issued

on a mass scale.

Interesting conclusions pertain to proximity

mobile payment such as RFID stickers or NFC

which undoubtedly are time efficient (Figure 1).

Some clients can even pay more quickly with their

mobile phones than with contactless cards taken out

of wallets. These contactless solutions are

technologically mature and based on international

standards. They gained quite a big popularity in

some countries, especially in Japan and the USA

(Eastwood, 2008). These factors greatly increase the

probability of their further development.

Popularisation of remote type mobile payments

at POS transactions seems to be more difficult. Such

payments are characterized by a wider functionality

than proximity type mobile payments because apart

from POS payments they can be used for

transactions on the Internet, for bill payments,

parking meters or purchase of tickets in a mass

transit communication system. However, due to a

considerable number of remote mobile payment

systems operating in the world, they are not

compatible with each other (Meyer, 2010). This is

one of the reasons why they have not become

common.

An additional barrier for market success of

remote mobile payments is a necessity for

consumers to type some information on the phone’s

keypad and this might be time consuming. Indeed,

the Polish domestic remote mobile payment system

proved to be the slowest payment method out of the

analysed (Figure 1). Nevertheless it must be

emphasised that remote mobile payments were only

slightly slower than payments with traditional cards

and there are potential ways that – if properly

implemented – may successfully speed up the

transaction process (eg. by predefined codes).

In order to assess the reasons for differences in

transaction time and to find bottlenecks that slow

down the process, a more detailed analysis is

needed. The process of payment was divided into

several stages, which were measured separately

using the video chronography method (see Chapter

4). Each stage of the transaction is processed by

either a consumer, salesperson or with the use of a

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225

technical device. The set of stages differs for every

payment method (Figure 2 and Figure 3). For each

stage the moment of its beginning and completion is

marked. It is crucial to notice that many activities

related to the payment process can be undertaken at

the same time, by the client, salesperson or

processed by the information system, which shortens

the duration of transaction.

The first payment method analyzed was cash

(Figure 2). The stage that delays the payment

process of cash is handing over the change and

receipt. Although taking out and counting money by

the client also lasts long, it mostly runs at the same

time as the service, which is the process of charging

for the purchased items by the salesperson. When we

compare cash payment with slower transactions by

traditional card with PIN code, a first important

observation is the long duration of: terminal

activation, entering the PIN code, the authorization

and printing the slip. Due to the fact that those stages

are performed one after another by the salesperson

and the client, and with the use of a payment

terminal, it is impossible to run them parallel, which

extends the whole transaction. Where the traditional

payment card with the signature is concerned, those

middle stages are shortened, because there is no

pause for entering the PIN code (the stage lasts

constantly from the terminal’s activation through the

online client’s bank account authorization until the

printing of the slips). However, at the end the client

is involved in signing the slip, which takes more

time than the process of entering the PIN code.

Moreover, the signing process does not let consumer

to prepare to leave the counter with the purchased

goods. As a result, sign-based transactions last a

little bit longer than transactions with a PIN code.

When contactless cards are considered, the

payment process runs in an entirely different way

than with traditional payment cards. The stages of

terminal activation and tapping the contactless card

are extremely short. For contactless cards in online

mode, the longest stages are authorization and

printing of the two slips. Those stages can radically

be shortened when the offline mode is used (Figure

3). Despite the fact that consumers are satisfied from

using contactless cards in offline as well as online

mode, it seems that from an economic point of view

in order to shorten the payment process using offline

mode is reasonable.

The results of our study also enable a comparison

between contactless cards and NFC mobile

payments (Figure 3). The NFC payment method

requires an activation of payment functions with the

use of a PIN code before the transaction can be

made. We observed that users take out their mobile

phone much faster than their payment card. At the

same time, entering the PIN code before using a

mobile phone at the terminal, does not extend the

time of a transaction, because users enter this code

while waiting for the activation of the terminal by

the salesperson. In conclusion, the NFC mobile

payments are as time effective as those where

contactless cards are used.

Cash

Traditional card with PIN - online

Traditional card – online with signature

Remote mobile payment

Figure 2: The stages of the payment process (I).

The situation is different for the remote mobile

payments model. In the study, we examined one

system operating in Poland branded mPay (Figure

2). In this case the stage of using the payment

instrument lasts fairly long. The system requires the

payee to enter certain codes on the mobile phone

related to the type of transaction, number of the store

and the amount to be paid. Authorizing is done by a

PIN number. The remote mobile payment system

tested turned out to be the slowest payment method

of all, even though the difference between that

payment method and the traditional payment card

with PIN code was rather small. There are also

psychological disadvantages: the consumer, while

using this method, is watched by the salesperson and

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ICEIS2012-14thInternationalConferenceonEnterpriseInformationSystems

226

other impatient clients waiting in the queue. This

was the reason why users taking part in tests

evaluated the remote mobile payments lower than

the cards in terms of satisfaction.

Contactless card – online

Contactless card – offline and without paper slips

NFC mobile payment with PIN – online

RFID mobile sticker – online

Figure 3: The stages of the payment process (II).

5 SUMMARY AND

CONCLUSIONS

The presented results provide novel insights into the

important problem of the time efficiency of payment

methods at physical POS. It has also revealed that,

until recently, cash was the fastest payment method

available at POS. As the results of the earlier studies

in the other countries show, speed of a transaction is

one of the most significant factors determining the

choice of a payment instrument by consumer.

Therefore, the time efficiency of cash, proved in our

study, is probably one of the reasons why people use

it so often. Traditional payment cards equipped with

a magnetic stripe or EMV chip are much slower.

The average time difference between cash and cards

is fairly large, about 20 seconds, and amounts to half

of the entire duration of a cash payment transaction.

It suggests that frequent use of traditional cards by

customers lengthens queues and may cause cost

increases for merchants, with additional work for

cashiers and risk of losing sales.

Moreover, our results have also allowed

verifying the time efficiency of new payment

solutions, which are expected to revolutionise the

payment market. The most widely known were the

contactless cards promoted by payment

organisations MasterCard and Visa. It turned out

that thanks to the innovative contactless technology,

in terms of transaction speed, such payment

instruments are likely to become true competitors of

cash. Contactless cards and other types of payments

devices – mobile stickers and NFC mobile payments

– were almost as fast as cash, even despite

processing in an online mode and with printing

paper slips. After removal of these restrictions and

operating in offline mode, transactions with

contactless cards can be even quicker than cash. This

may be considered a technological breakthrough in

the evolution of the means of payment. For the first

time in history, an electronic payment instrument,

being issued on a mass scale, turns out to be more

time efficient at POS than cash. Furthermore, the

speed and convenience of contactless payments

make them attractive for merchants and customers in

low-value payments.

It seems that the development of proximity

mobile payment, including NFC payment with PIN

code, can be expected. These payment solutions

have proved to be highly time efficient and were

well received by consumers during the study.

However, because of limited availability of mobile

phones equipped with NFC technology, the RFID

mobile stickers and other contactless payment

gadgets have the potential to be part of the first wave

of the contactless payment revolution. The time

efficiency together with the strong support from the

side of international payment card organisations

suggest that the dynamic development of contactless

mobile payments around the world is highly

probable. In contrast, remote mobile payment

schemes are rather slow in POS purchases. The

execution of transactions in text mode seems to be a

major barrier to their application at physical POS.

Due to a lower time efficiency, it seems that remote

mobile payments, at the current stage of their

development, should rather be directed to other

payment market segments (e.g. e-commerce,

remittance, bill payments, public transport), where

their additional functionality may be fully used.

The results presented in the paper are important

from a scientific, policy as well as a business

viewpoint. The data enable not only to assess the

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ChronometricAnalysisofaPaymentProcessforCash,CardsandMobileDevices

227

average time of a purchase transaction but also to

determine the influence of payment methods on the

queuing time and costs borne by merchants. The

results of the study allow also to asses consumers’

costs of queuing and finally more precise estimation

of the general social costs of payment methods. The

comparison of many payment instruments gives

valuable knowledge that can be useful in preparing

strategies for promoting efficient payment

instruments among consumers and merchants, e.g.

by central banks or public authorities, therefore they

are important for policy reasons. Moreover, the

results may be especially important for companies

introducing new payment solutions to the market.

The detailed timing study of payment process

will allow in the future to build an accurate model of

the whole payment process covering customer and

salesperson activities, and including other factors

such as: the type of terminal or a number of items

purchased. We also plan to use the obtained data for

modelling the process of queue formation and

reduction, as well as for the simulation of

functioning of the newly designed payment

instruments. It would also be very interesting to

extend the study on the other types of POS.

ACKNOWLEDGEMENTS

This work was supported by the Polish Ministry of

Science and Higher Education under Grant No. N

N113 308835. We wish to express our appreciation

to: Zabka Polska SA, MasterCard Europe, and MCX

Systems Ltd. for supporting the data collection at

POS. Moreover, we are grateful to 61 students of the

Nicolaus Copernicus University in Torun and 45

students of the Management Faculty, Warsaw

University, for their participation in the study. We

would also like to thank Leo Van Hove for helpful

comments and suggestions.

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APPENDIX

The results of verification for equality of two expected values of transaction durations for compared payment methods.

Payment methods Perspective

traditional card

with signature

traditional card

with PIN

contactless

card - online

RFID mobile

sticker

NFC mobile

payment with PIN

remote mobile

payment

cash

C -2.9265*** -9.5794*** -0.4819 1.0233 0.6978 -7.0321***

M -7.6297*** -11.7787*** -4.9843*** -3.7122*** -5.3070*** -8.7926***

P -4.4799*** -12.1696*** -5.3445*** -0.2763 -3.3612*** -9.0738***

traditional card

with signature

C 0.4173 2.8172*** 3.0712*** 3.0147*** -1.1596

M -0.9770 4.6502*** 5.5170*** 5.1171*** -3.6199***

P -2.2805** 1.7065* 4.2808*** 3.2395*** -4.1897***

traditional card

with PIN

C 8.2263*** 9.2958*** 9.3699*** -2.7278***

M 7.2402*** 8.4607*** 8.0642*** -3.1968***

P 6.0656*** 11.1477*** 9.2326*** -2.9518***

contactless card

C 1.1862 0.9361 -6.7313***

M 1.3001 0.5076 -7.0086***

P 4.6592*** 2.6477*** -6.4924***

RFID mobile

sticker

C -0.3433 7.1697***

M -0.9180 -7.5512***

P -2.5375** -8.8418***

NFC mobile

payment with

C 7.1135***

M -7.2938***

P -7.9472***

Notes: “C” stands for “Consumer perspective”, “M” stands for “Merchant perspective” and “P” stands for “Pure payment process”. *, **,

*** denote statistical significance at 10%, 5% and 1%, respectively.

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