In the article detailing American Express’ contactless payment card product, Amex payment product manager David Bonalle comments that the value proposition for contactless cards is far different from that for contact chip cards. Contactless technology, he says, is all about user convenience while contact chip is all about security and additional applications. This is an insightful comment. And it is one that have heard in various forms from a number of payment industry leaders.
Contactless technology is the only current payment product that I hear mentioned in the same breath with consumer benefit. Other technologies are justified based on card issuer benefits or merchant benefits. “Magnetic stripe cards are inexpensive and save the issuer money.” “Contact chip cards increase security and can reduce fraud reducing losses for both the merchants and issuers.” But contactless makes the transaction “more convenient for the consumer.”
What a difference. Perhaps this will be the factor that makes contactless payments the next great wave. What is often overlooked, however, is that it also can bring the benefits described for the other technologies. The security of a contactless token can be as high as that for a contact chip card. And the costs, while not as low as a magnetic stripe card, can be significantly lower than the contact ICs used in payment applications.
In recent months, we have seen contactless payment products from Visa, MasterCard, JCB, and now American Express. To hear American Express, a company whose Blue credit card product introduced the contact chip card to consumers in the North American market, describe the strong consumer-focused value proposition for RFID is significant. It hints to a bright future for contactless technologies in the bank card arena.
Chris Corum, Editor