The latest white paper from the 100-member strong Smart Card Alliance examines contactless technology for use in payments applications.
“Contactless Payment and the Retail Point of Sale: Applications, Technologies and Transaction Models,” a 50-page white paper released this month, attempts to provide answers, it says, to some commonly asked questions, such as:
- What retail sectors can benefit most from contactless payment?
- What are example implementations of contactless payment and how successful have they been?
- What are the technologies that can support contactless payment?
- What are the business drivers for adopting contactless payment?
- Are there advantages to using contactless smart cards in contactless payment systems?
“The reason why we picked this topic is that we’ve been reading and hearing that there is a tremendous amount of interest in contactless payment technology. We wanted to provide a resource document that
would explain the different technologies and how they’ve been used in some of the projects around the world and some of the benefits that can be derived using smart cards,” said Randy Vanderhoof, Smart Card Alliance Executive Director.
“This white paper will serve as an excellent tool for anyone evaluating a contactless payment program,” said Michael Madden, vice president, e-business development, MasterCard International.
The paper discusses some of the newer operations using contactless technology, such as MasterCard’s PayPass. Consumers tap their cards or wave them by a specially equipped merchant terminal. Currently in testing in Orlando, Florida, the program is geared for merchants where speed is important, such as fast food restaurants, gas stations, convenience stores, and movie theaters. According to a MasterCard survey, 63% of consumers said they would “definitely” or “probably” use the PayPass system were it offered to them.
“We decided it was a good time to look at this trend (contactless technology) both in North America and around the world,” added Mr. Vanderhoof.
“Since we defined contactless payment in a very broad way, our newest white paper covers all of the primary contactless radio frequency-based payment technologies in use,” he added.
Some of the specific systems examined include:
- The Hong Kong Octopus Card, considered “the most successful and mature implementation of contactless smart cards used for mass transit payment;
- ExxonMobil Speedpass, with more than six million customers;
- Visa’s contactless payment in South Korea
- MasterCard Paypass, announced in December, 2002.
“Speedpass and Easypass are being applied in payment environments that aren’t ISO compliant smart card technology,” said Mr. Vanderhoof. “The movement is to migrate these applications into industry-standard smart card applications. The highlight is Texas Instruments’ announcement it will be introducing the 14443 version of the speed pass technology and is working with American Express on a contactless payment pilot in Phoenix.”
The white paper also discusses retailer benefits (faster transaction times, increased revenue, improved efficiency and better customer information and more), retailer costs (upgrading POS hardware and software, upgrading host systems, training customer service staff, marketing and promotion and transaction fees), and issuer costs (price of the contactless payment device, personalization and life cycle management, operational, and transaction processing infrastructure costs).
The alliance has a “smart talk” teleconference scheduled for April 3 when, said Mr. Vanderhoof, further discussions will be held on issues addressed in this latest white paper.
The panel of experts for the smart talk discussion include Mr. Vanderhoof; Mr. Madden; Julie Krueger, vice president, infrastructure and emerging technology, JCB International Credit Card Co.; Jeremy Wyant, RFID product manager, NTRU Cryptosystems, Inc.; Amol Deshmukh, strategic relations, SclumbergerSema; and Ian Duthie, smart card ICS marketing manager, Atmel.