RFID Payment Platforms Gaining Momentum

Late last year, Visa announced the release of a global contactless-payments specification, designed to enable Visa Contactless (payWave) cardholders from all parts of the world to use their cards at any merchant that has deployed the spec in its RFID-enabled payment terminals. The new Oyster/payWave cards, and other payWave cards issued in Europe, will follow this specification, enabling European cardholders to use them both in Europe and in the United States. Once Asia adopts the global specification, European payWave cardholders will be able to use it there, as well. Visa's global specification also supports RFID transactions requiring a consumer to key a personal identification number into the payment terminal. In the United Kingdom, this is required for purchases of more than €10 ($19.90).

Brian Triplett, Visa USA's senior vice president of emerging product development, told conference attendees the company will launch a pilot program testing the use of cell phones for RFID payments complying with the near-field communication (NFC) specification, which is based on high-frequency technology similar to that used in RFID cards. Visa is partnering with South Korean telecommunications firm SK Telecom on that project.

Additionally, MasterCard provided an update on its PayPass RFID payment platform rollout. Banks have now issued more than 14 million PayPass payment cards and fobs in 15 countries, said Cathleen Conforti, the firm's senior vice president and global PayPass product manager. This year, she added, the credit-card association is planning an additional 100 pilot programs in 29 countries.Some of the programs will incorporate the use of NFC technology for cell-phone payments. Conforti explained that a pilot program in which employees of the Royal Bank of Scotland were issued PayPass cards to use at eight merchant locations at the bank's Edinburgh headquarters (see Royal Bank of Scotland Testing RFID Payment Cards) has been moved to a permanent launch.

Conforti provided statistics from a MasterCard research study showing how the PayPass program is driving the types of financial benefits MasterCard and other card organizations have touted since first launching the technology in 2004. She said the study showed increased spending of 19 percent per PayPass account, as compared with accounts for which consumers have only been issued magnetic-stripe cards. It also indicated consumers with PayPass cards or fobs are using them 29 percent more often than those with non-PayPass cards, and that the average transaction size of a PayPass payment is smaller than for transactions made with magnetic stripe cards. Almost 80 percent of PayPass transactions are for purchases $25 or less, which Conforti cited as evidence MasterCard is achieving one of its main goals: displacing cash for small purchases.

Merchant adoption is at the heart of the technology's success, and according to MasterCard, there are now 51 million merchant locations worldwide that accept PayPass payments. Almost all of these merchants also accept RFID payments made with Visa's payWave and American Express ExpressPay cards and fobs. What's more, Discover Financial Services is field-testing its own RFID-enabled credit cards, payment fobs and cell phones with embedded NFC modules (see Discover Rolling Out RFID Payment Platform).

Leigh Malnati, vice president of advanced payments for American Express, did not provide specific data on the number of ExpressPay RFID-enabled cards the company has issued, but noted that the company has seen consistent increases in adoption and usage of its ExpressPay cards and fobs, especially among young cardholders. Malnati added that American Express has taken a different tactic in launching the RFID cards than MasterCard and Visa: It has not done any national advertising, opting instead to use placards and similar advertising vehicles inside merchant locations that already accept ExpressPay.