Banking on technology



A Spanish financial organization rolls out an innovative contactless payment project. But first it must get stakeholders to accept the new technology.


Juan Morlà, la Caixa, Barcelona, Spain

With the rise of mobile payments, Spanish retail banking organization la Caixa recognized an opportunity to be at the forefront of a new technology. The subsequent unveiling of a contactless payment program focused on transforming how its customers make purchases and use ATMs.

The technology is called “contactless” because consumers simply wave their card or smartphone near a point of sale (POS) or ATM to make a purchase or withdrawal.

To help secure buy-in from customers, the bank gave out credit cards with built-in contactless payment chips. The project also involved installing POS chip readers at select merchants and ATMs.

While other organizations are still in the discovery stage concerning contactless payment, la Caixa is making serious headway on projects in the hopes of positioning itself as a leader in the space.


When the financial institution embarked on the contactless payment program, the biggest risk was entering into a new territory using unknown technology, says Juan Morlà, project manager of the contactless payment program at la Caixa, Barcelona, Spain.

There was a good chance that merchants and retail customers alike would refuse the initiative—which would have been a serious blow, considering the extensive investment.

“There were no statistics, no real evidence that contactless payments could work in the Spanish market,” he says.

But the bank was convinced this project offered benefits for customers.

The risk of failure fueled la Caixa's decision to test the new service one city at a time. “Our mitigation plan hinged on rolling out by phases and listening for feedback to ensure success. It's not a usual launch because la Caixa usually launches everything nationwide,” he says.

Instead, the bank set up a pilot program in May 2010 in the town of Sitges, installing contactless payment terminals at 5,000 retailers. In partnership with Samsung electronics company, the project team provided mobile phones to customers of la Caixa, credit card company Visa and telecom operator Telefónica.

Customers only have to enter a PIN (personal identification number) if the transaction exceeds €20.

A post-implementation survey showed that 70 percent of consumers were satisfied with the technology. “Many of the POS devices and mobile phones were left operational even after the project ended, with many customers still utilizing the technology,” Mr. Morlà says. “The conclusion drawn from Sitges was that the contactless system was ready to be rolled out commercially as a new service to customers.”

The next stage of the program took place in the Mediterranean Sea's Balearic Islands, including Majorca, Minorca and Ibiza, in March 2011. In this phase, la Caixa distributed contactless payment devices to more than 5,000 establishments and sent contactless cards to more than 130,000 Visa cardholders. La Caixa also signed an agreement with the Metropolitan Transport Company in Palma, Majorca to integrate the contactless technology as a payment method for public transit tickets.

The results of the Balearic beta phase also were favorable. Within six months, more than 60,000 contactless cards were active, with 86 percent of customers declaring the new technology to be very useful, according to a survey of participants.

Furthermore, 40 percent of payments made with contactless cards were for amounts of less than €20—confirming the theory that contactless technology would be particularly useful for quick, inexpensive payments.

Conducting surveys and analyzing the resulting statistics were a vital component of the project, Mr. Morlà says. “One of the objectives was to test that contactless systems were really relevant for customers and that they helped to increase the flow of low-dollar transactions for our merchants,” he explains. “Statistics showed that customers were even more prepared for the change in payments than we thought at first.”

The current deployment phase, which launched in January in Barcelona, is based on the same model the bank used in the Balearics—on a much larger scale. With a budget of €9 million, the project includes distributing 1 million contactless cards to consumers, supplying 17,000 terminals to retailers and, over time, equipping more than 500 ATMs with contactless readers.

May 2010
Phase one: In collaboration with Visa, Telefónica and Samsung, la Caixa launches its contactless payment pilot project in Sitges.

December 2010
The pilot project ends, with a survey revealing that 70 percent of customers were satisfied with the technology.


March 2011
Phase two: La Caixa rolls out the technology to the Balearic Islands.

September 2011
The Balearics project closes, with a survey revealing that 86 percent of customers found the new technology very useful.

January 2012
Phase three: The project expands to Barcelona.

June 2012
Goal for complete rollout of contactless cards to Barcelona market customers.


End of 2014
Expected complete rollout of contactless technology nationwide.



Given that la Caixa is the first bank to start rolling out contactless technology in Spain and one of the first in Europe, Mr. Morlà says the primary challenges have been related to earning buy-in, including:

  • Explaining to individual and retail customers how the new technology works
  • The benefits of the new technology
  • What security is in place

“Initially, a number of customers received their contactless card yet continued making conventional payments, most likely because they had never seen the system in action,” he says. “Raising awareness is a key component in launching pioneering projects of this nature.”


From left: Juan Morlà and Miguel Ángel Pozuelo, la Caixa, Barcelona, Spain

To help win over consumers and encourage use of the technology in Sitges and the Balearics, la Caixa introduced rewards points and promotions to win small prizes such as cinema tickets.

“A local advertising campaign was arranged as well, and there were meetings with customers and merchants to teach them how to use contactless technology,” Mr. Morlà says. “Now contactless technology is something more familiar for people than it was some months ago. Before deciding which one of all these options was to be applied in Barcelona, we decided to first test the customer response.”

Throughout the Barcelona rollout, the project team has reinforced previous communication campaigns to explain the benefits of the technology to customers. La Caixa also sought to alleviate security concerns by providing a warranty, which offers coverage for cardholders against possible fraudulent use.

La Caixa has yet to experience any significant resistance, according to Mr. Morlà. “Merchants are intrigued by the offering,” he attests. “By streamlining the collection of small sums, the contactless technology allows merchants to rapidly move people through check-out lines. This is especially attractive in places with large crowds like supermarkets, restaurants, kiosks, cafés, gas stations and tourist shops.”

With each phase garnering positive feedback, la Caixa's contactless payment program is on track to keep the bank at the forefront of innovation.

“When complete, Barcelona will become the first city in Europe with a fully developed contactless payment system—even before London, England, where rollout is planned for the Olympic Games,” says Antonio Massanell Lavilla, managing director of la Caixa in Barcelona.

The bank plans to expand the technology countrywide, wrapping up the program by the end of 2014.PM


The primary challenges have been related to earning buy-in, including explaining to individual and retail customers how the new technology works, the benefits of the new technology and what security is in place.




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