SmartTalk teleconference discusses trends in contactless payment technology
01 April, 2003
category: Contactless, Financial, Library, NFC
Some of the top names in smart card technology were among the guest presenters during the Smart Card Alliance’s April SmartTalk teleconference on “Trends and Technology Advances in Contactless Payment.” Fifty-plus people logged in for the 75-minute program on April 3.
Randy Vanderhoof, executive director of Smart Card Alliance, which hosted the teleconference, outlined some of the conference’s objectives such as: What retail sectors can benefit most from contactless payment? What are example implementations of contactless payment and how successful have they been? and What are the technologies that can support contactless payment.
Contactless cards are benefiting from increasing customer paranoia over handing their cards over to a clerk for payment. Often the cards are even out of the customer’s sight as is common with restaurants transactions.
“At many POS (point of sale) locations, consumers are growing more and more reluctant with handing over their cards,” said Michael Madden, vice president for e-business development for MasterCard International. “Contactless solves that.”
Another area where contactless shines, said Mr. Madden, is in the simple area of swiping the card. “Consumers are often confused about how to swipe cards. Contactless alleviates that confusion,” he said.
Since MasterCard’s Paypass was introduced, “merchants have seen an 11% increase in sales,” said Mr. Madden. A Paypass pilot project was rolled out last December in Orlando. Chase, Citibank, and MBNA issued the cards. Participating merchants include McDonald’s, Chevron, City of Orlando parking, Eckerds, Ritz and Wolf camera and Loews Universal Cineplex.
Julie Krueger, VP for Infrastructure Management, JCB International Credit Card Co., presented on “Contactless Payment, Implementations and Results.” This section focused on some of the key uses of contactless cards around the world, including the “most mature card,” Hong Kong’s Octopus Card which records, more than seven million transactions daily. More than nine million cards have been issued and the daily transaction value is about $6.5 million, she said.
With ExxonMobil’s Speedpass, Ms. Krueger said customers actually “increased their gasoline purchases by 15%, resulting in a $4 lift for gasoline purchased after the Speedpass implementation.” More than six million Speedpass devices have been issued, either as a key fob, wristwatch, or car-mounted transponder.
American Express is also in on the action, piloting its ExpressPay last year via either key fob or card.
One issue that popped up from most presenters was, as Ms. Krueger outlined, the consumer research that suggests that “consumers value the convenience of contactless payments. Pilot results to date,” she said, “confirm the value proposition to merchants and consumers.”
Jeremy Wyant, RFID product manager for NTRU Cryptosystems, Inc., gave a technical overview of the contactless options available, such as ISO/IEC 14443 and 15693, proprietary 13.56 MHz, low and ultra-high frequency, infrared, microwave, carrier-based mobile, and near field communications (NFC).
“Contactless Payment Transaction Models” was the topic covered by Amol Deshmukh, Strategic Relations for SchlumbergerSema. He listed several approaches to contactless, including Speedpass and E-Zpass, both based on pre-authorized accounts, and the infrastructure currently available to support these transactions.
Ian Duthie, Smart Card ICs Marketing Manager for Atmel, listed some of the advantages of smart cards. In this ID-theft conscious world, smart cards “are tamper resistant and difficult to counterfeit,” he said. “But you want to make sure you’re at the leading edge, not the bleeding edge.”
“So why the use of contactless? Ease of use, convenience, and speed. If you’re going to have a payment card in your wallet, why not a contactless card which has proven its usefulness,” he added.
Tolan Steele, VP for Product Development and Management, Visa USA, said there is “a continuing trend away from cash-based payments. From a product development standpoint, we’re right where we should be. The real issue is very simple: contactless devices are better. Smart cards are well-positioned to meet the merchants’ needs. And for those already playing with contactless, the message is ‘Stay on target.’ For those of you unfamiliar with the technology, begin moving up the learning curve.”
Several Smart Card Alliance white papers on contactless payment, applications, and the retail payment infrastructure are available at the alliance’s web site at www.smartcardalliance.org.
The alliance’s next teleconference SmartTalk is June 5 on “Privacy and Secure ID Systems.” Check the web site for further information.
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