Eftpos and the Consumers

John W. Bakke, Norwegian Fund for Market and Distribution Research
[ to cite ]:
John W. Bakke (1989) ,"Eftpos and the Consumers", in NA - Advances in Consumer Research Volume 16, eds. Thomas K. Srull, Provo, UT : Association for Consumer Research, Pages: 634-638.

Advances in Consumer Research Volume 16, 1989    Pages 634-638


John W. Bakke, Norwegian Fund for Market and Distribution Research


As consumers we are exposed to an increasing number of new forms of technology. This represents a challenge for us as consumers as well as researchers. A common approach to this field of research is, somewhat simplified, to assume that technology evolves and spreads throughout society by some endogenous mechanism, and then to analyze the consequences for society. A quotation from a marketing researcher, T. Leavitt, (with reference to the distribution system) may illustrate this approach:

Technology is the acknowledged master, the engine that pulls all the rest along and determines where the future shall be, how fast it shall be attained, what we shall do within it, and who shall prosper, who languish, who fossilize. (Levitt 1985)

The role of a researcher is then to find out where the future shall be, what we shall do there, e and, perhaps to give an evaluation of whether this development is good or bad for the consumer.

In this paper I will argue for an alternative; actor-based approach to this field of research. A m argument in this approach is to view the technology in it's context of use (cf. Bijker et al. 1987, Latour 1988). With reference to the consumers, this implies to view the technology as one element among other in their daily life. The second part of the argument then to view the technology in the context of other actors' use it (banks, retailers etc.). Following this line of thought, it than becomes essential to study development and diffusion of the technology. Through this actor-based process, the shape of the technology, as it is presented to the consumers, is determined.

Within this approach, it becomes important be specific with regard both to the technology in question, and it's context of use. I will here use EFTPOS (Electronic Funds Transfer at the Point of Sales), as an example. In the following, the concern of activity and technology will be outlined, before, brief sketch of the EFTPOS-system will be given. Then I will give a presentation of the different actors in the EFTPOS-system, and their role in the operation and establishment of the system. Finally some implications of this approach are suggested.


When arguing for an actor-based theory, it is necessary to elaborate the concepts of action and technology.

Using a scheme developed by Parsons, action is a relation between the goals of an actor, the means over which he has control, the external conditions which he cannot change, and his normative orientation (Parsons 1937).

For the actors involved, the technology may be one of his means, which he may use to pursue his goals, or one of the external conditions, confirming his actions. A major point in the actor-based approach is to view this last aspect, "technology as condition", as the outcome of other actors' seeking to attain their goals (MacKenzie and Wajcman 1985).

This means that the technology is a nexus for different actors pursuing different goals, and having different criteria for success and failure. The process of technology/development then becomes a field for conflict and interplay among different interests; a place where some actors use technologies, some of them try to convince others to use the technologies, and still others try to make the use obligatory (Latour 1988).


EFTPOS is a technology for funds transfer. For the consumer, this represents a supplement to other funds transfer devices, as cash, cheques and credit cards. When using the EFTPOS-system, the consumer is paying by card at terminals at individual points of sale. Via the telecommunications network, these terminals are connected to the bank's data processing center which, on receiving an authorized signal from the terminal, transfers "electronic money" from the customer's account to the retailer's account. EFTPOS introduces a new relation between the consumer and the retailer, through the other actors involved (cf. fig. 1), and through the specific and different interests of each actor relating to the technological system.

There are different technical realizations of this system. Today, there are two different types of terminals, on-line and off-line solutions, and there are two different types of cards, the "Smart-cards" based on micro-chips, and the cards based on the magnetic stripe technology.

In the last few years, this method of payment has gained momentum - terminals are being installed in an increasing number of shops. During 1987, the year of breakthrough in Norway, the amount paid this way increased nine-fold. The number of cards that may be used in these terminals is large. The cards are issued by the banks, either as cards meant to be used as a personal identification when using a check, or as separate cards that also can be used (and originally were issued to be used) in automated teller machines (ATMs). At the end of 1987 the approximate figures were 1 2 million cards and 2000 EFTPOS-terminals.


So far in this presentation, the structure of the EFTPOS-system has been in focus, although some of the actors have been mentioned in the passing. To get a better understanding of the consumers' position, it is necessary to take a closer look at these actors, at how the EFTPOS-system is a part of their respective spheres of action.



As mentioned, for the consumer EFTPOS is a method of payment, or better, it is a possible element in his payment behavior. There are several properties he may want for the payment system (for EFTPOS, see Mitchell 1988). It ought to be reliable, fast and cheap, easy to use, easily available, and it should be secure against loss or theft. Of course, these different properties are not of equal importance.

For the consumer the means of payment available, and his skills in using them are the principal resources relevant for his decision concerning payment. The different means of payment have different properties. Of these, cash is the simplest. It is fast, easy, cheap and non-exclusive. However, cash is not safe against theft. The checks are safer, but also more onerous and expensive in use. The cards are less expensive than checks, and more convenient - when you know how to use them. In Norway we have a great number of automated teller machines (ATMs) which give experience in the use of cards (ATM is not a form of EFTPOS, it is a way of getting cash).

This simplified picture shows that EFTPOS is one element among many others in the consumer's payment-activity. As the case of the ATMs shows, this activity is related to a network of other technologies, activities and skills, Hence the meaning of the technology will differ among consumers. This sketch also shows that technological and nontechnological features of the payment system present themselves to the consumer in much the same way. Prices, skills and (technical) compatibility are all parts of the same picture.

One may study the other actors in a similar way. The goals for the retailer is to have a payment system that is reliable, safe and simple, that reduces queuing time, and makes sure that the customers buying power is not reduced. Here again EFTPOS is one of many possibilities, along with cash, checks and credit-cards.

The banks want to transfer money in a safe and cheap way. Especially, they want to reduce the use of paper-based transactions, because these are expensive and more labor-intensive. For the banks, EFTPOS is one possibility among others for the transfer of money. Other possibilities include cask checks and endorsements. The banks have a variety of means at their disposal, including technical means, as the establishment of the EFTPOS-system, economic means, as the pricing of their services, and institutional means, as the establishment of routines for funds transfer from one bank to another.

The EFTPOS-system is also related to other activities and other technologies. For the consumer, the payment-activity is one part of his general shopping activity. And I dare say it is not the part given most consideration. Further, the electronic funds transfer may take place in a terminal connected to his PC, which also may be used to electronic shopping. For the banks, EFTPOS is a part of a greater activity not exclusively intended for EFTPOS services. This includes the bank-account of their customers.

For the retailer, EFTPOS and other kinds of payment systems form elements in a general strategy, among policies for pricing, assortment etc. Other technologies may be used to control this, eg. retail data systems used to control pricing and the flow of goods. The payment system may also be directly connected with the retail data system. This makes the payment more convenient (for the retailer), since the sum may be transferred automatically from the cash-register to the payment terminal. There are also more innovative forms of use. It is possible to make systems that combine shopping information (information which is not related to the identity of the customer) to information about payment (which is related to the customer). In this way the shop may acquire an overview of the consumption habits of their customers.

To conclude, EFTPOS is not an isolated technology for funds transfer, it is embedded in a greater network of other activities and other technologies. For the actors involved, EFTPOS is one element involved in rather different activities and strategies, and therefore the "meaning" and importance of the technology will differ. For an actor working with money and funds transfer, EFTPOS will probably be of greater strategic importance, than for an actor for whom this is a minor part in some other activity.


In the presentation so far, only those actors most directly involved have been taken into account. And the description has focus ed upon the established system. This system, however, is the outcome of a development process. We have seen the working system as a field of differing interests. This is even more evident in the phase of technology development.

Neither of the actors described, have the capability to establish the EFTPOS-system. They need technical and organizational assistance, at least from technical experts and formal authorities.

The most important participants in the establishment and operation of the system are given in Figure 2.

The principal participants are the consumers and retailers. The actors on the left-hand side in the figure are directly involved in the operation of the system, while those on the right-hand side contribute to its definition and establishment.

This figure gives a static picture of the actors involved. It is possible to distinguish between different phases in the process of shaping and establishment of this system (for a more detailed description, see Jacobsen and Bakke 1988).

- The establishment of the EFTPOS-concept: The bank associations have been the driving forces in this phase. They were the initiators of the system, and they made their choices of technical solutions (cards and terminals). The development in this phase has to some degree been conducted in cooperation with representatives from the retailers association and the consumer authorities. They have signed an agreement of intent concerning the development of funds transfer systems, including the principle of inter-operability, the ability to use one bank's EFTPOS-card in another's terminal, as well as a cost-sharing agreement.

- The diffusion of the EFTPOS-concept to the banks: Because the installment of terminals is done by the retailer's bank, the banks themselves constitute a population for diffusion. There is some degree of coordination in this phase, because of the integration among the banks.

- The diffusion of EFTPOS-terminals to the retailers: This phase is more decentralized. Whether or not to install the system is a choice made by each retailer. However, there is some coordination even here, because some chains of stores use this payment system as an element in their marketing. Information and promotion also take place in cooperation with the banks.

And finally

- The diffusion to the consumers. The diffusion of the EFTPOS-system to the consumers is a double-sided process: the diffusion of the cards and the method of payment. This first one has already taken place. As the cards also may be used in the ATMs, a large numbers of cards are already in use among the consumers. The second one is dependent upon a lot of factors, including those mentioned above, concerning the properties of the means of payment.

The different phases have their specific characteristics, while at the same time they are linked together. Of interest is that the construction of the basic design and the development of the infra-structure takes place in much the same way as a systems development process in organizations, while the diffusion of terminals to the retailers and the spread of the method of payment resembles the diffusion of goods for mass-consumption (cf. Rogers 1983). While being illustrative, this analogy is not without difficulties, since there is a great amount of competition between the actors in this "systems development", and there is some degree of coordination in the diffusion process, especially in the diffusion of terminals to the retailers.

The course of this process has some important implications for the design of the system and for the consumers' position. The different groups of actors become involved in the design process at different stages of the development. This means that their potential influence on the shape of the system will differ. Those involved in the early phases of the project will set standards with regard to the technical and non-technical properties of the system. The choices made will be "frozen" in the technical and organizational system, and will therefore set boundaries for the later development. Important dimensions are the choice of EFTPOS-technology, the pricing of this service, strategies for diffusion, advertising and "image-production" etc. In particular, the consumers are involved late in the development process,- and have few opportunities for direct influence. On the other hand, the success of the system is dependent upon all the different participants, as the late-comers in the development-process have the possibility not to use the system. In other words, there is a mutual dependence among the actors, while there is an asymmetry with regard to the influence over the resulting system.


In this paper a complex system is described, in which a process of technical and social change takes place. This process is described with reference to the goals and activities of the different actors. The technology is only one part of their respective strategies (although it is this part that keeps the actors (and this article) together). Having different goals, different attributes of the technology will be of importance to each actor. The establishment of the system is of importance to the consumers, because they are the ultimate users, and the operation of the whole system depends on their (our) acceptance. Two points have been made:



- The consumers' interests are expressed late in the process

- The payment-activity may be an object of less consideration for the consumer than for the other actors, because it is a minor part of the general shopping behavior. He therefore may not be as demanding to the payment system as the other actors

Both these points leads to the question on how the consumer interests are taken care of in the establishment and operation of the system.

The concept of consumer interest is in need of clarification and exposition, both with regard to the use of the system, and to the hidden and unintended aspects of the system. Questions of interest concern reliability versus confidentiality, and security versus ease of use. A complicating factor is that "the consumers" as a group is very heterogenous.

A further question is how to secure those interests, while the consumers are fragmented as a group, and their interests are diverse. This is even more important because they are involved late in the process of systems-development. There are several concepts for consumer influence. One is influence through the market, where the market sorts out solutions with unwanted characteristics. Another is regulation with laws or agreements through the support of official authorities, still another is to enter coalitions with some of the other actors (Mayer 1987). In this case, the consumers and the retailers (as a group) have a common interest in establishing a wide-ranging, general method of payment.

The aim of this paper has been to present an alternative way of studying technological systems. It is my hope that this approach may pose interesting questions for further theoretical and empirical research, and that this paper is only a beginning of further work along these lines.


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