Bank-issued payment cards have traditionally been considered among the least likely markets for contactless cards to crack. In North America, advanced payment technologies have struggled to gain ground because of the deeply entrenched base of magnetic stripe point of sale terminals. In Europe and Asia contact chip cards have been making steady headway due to greater consumer acceptance and the pressures to combat fraud via the Europay Mastercard Visa (EMV) standard for chip card usage.
Developments such as these have left little room for RFID technologies in the realm of payment cards. ‘Sure they can handle fare collection where throughput is crucial but merchant transactions?’ Both banks and card associations have traditionally been skeptical.
But wait. Some are beginning to take notice of the consumer appeal and the technical capabilities of RFID. And not just minor players. Last month ContactlessNews reported that Visa had selected the ISO 14443 standard for its contactless payment cards. More significant than the selection of 14443 was that the world’s leading card association had actually endorsed a contactless technology for secure payments.
Mastercard, too, announced its utilization of contactless technology in a high profile trial in Orlando, Florida called PayPass. And who are the issuing banks for this trial? Only three of the largest credit issuers in the U.S.–MBNA, Chase, and Citibank.
In this issue of ContactlessNews, we highlight two other major players from the bankcard arena that are also issuing contactless cards. At locations in Japan and Taiwan, JCB is deploying cards while Bank of America is testing contactless cards with 10,000 of its employees in Charlotte, North Carolina.
What does this all mean? Skeptics may point to the early focus on contact chip cards and the problems continue to plague mass adoption.
Sure, the PayPass trial in Orlando could meet the same fate as pilots for contact chip payment cards in the 1990s. But hopefully the lessons learned in the trials of Mondex in Canada and the U.K and VisaCash at the Atlanta Olympics or in Manhattan’s Upper West Side will be remembered.
The contactless payment card industry stands at a crossroads similar to that faced by the contact chip card industry in the late 1990s. The latter met with limited success at best. Contact chip cards are just now finding a real fit and it is happening only in certain geographic regions.
How will contactless technology fare? Only time will tell. But we have several advantages that the contact chip industry didn’t have.
First, we have their hard fought experiences–both positive and negative–upon which to build. Most of the players have been through this before. The card associations and the major issuing banks should be better able to convince consumers of the need for the cards, show merchants how their businesses will benefit from card acceptance, and educate all parties on the proper use of the new technology.
Second, RFID has an inherent consumer appeal. People tend to be impressed when they can wave a card near a reader and conduct a transaction.
But we face challenges as well. There is no visual identifier–such as a gold chip or a black stripe–to help focus a confused cardholder. And the privacy concerns that impact all identification technologies are compounded by the fear that ‘anybody could read my card as I am walking down the street.’
Can the payment industry capitalize on its strengths and downplay its perceived weaknesses. Let’s hope it can do it, and do it quickly. As history has shown, you don’t get many second chances when it comes to consumer acceptance.