MasterCard Rolls Out Contactless Carpet in the U.K.

By Mary Catherine O'Connor

Sept. 7, 2007—MasterCard tried to make a big splash in London this week, with the launch of the U.K. rollout of PayPass, its RFID-enabled payment platform. The card organization plastered London's Millennium Bridge, which crosses the River Thames, with imitation bank notes, drumming up a buzz about the "path" to a cashless future. Londoners are expected to begin using PayPass cards to pay for small-ticket goods in select shops this fall.

The more than 10 million British commuters who use the Oyster card to pay fares to ride the city's subway and bus system are already familiar with the ISO 14443-compliant RFID technology used by PayPass. Earlier this year, Visa announced plans for a major European rollout of its payWave cards—which use the same technology as PayPass and Oyster—this fall, beginning with the United Kingdom.

To create a buzz about the "path" to a cashless future, MasterCard plastered London's Millennium Bridge with imitation bank notes.

More than five banks, including Barclays, Citibank and HSBC, say they'll work with MasterCard and Visa to issue the RFID-enabled cards to cardholders. Visa is working with a number of London banks, as well as the city's public transportation system, to enable the payWave card to double as an Oyster payment card for transit fares.

According to MasterCard, the first U.K. consumers will receive PayPass cards this month, with 5 million expected to be issued by the end of next year. McDonald's, Eat, Coffee Republic, Yo!Sushi, Krispy Kreme, Books Etc, Threshers and the Science Museum are among the London merchants set to equip payment terminals with the interrogators needed to accept the payment cards. This spring, Visa reported that around 200,000 U.K. consumers will initially receive its cards, and that 2,000 retailers will accept the Visa payWave cards in London (see RFID Payment Platforms Gaining Momentum).

The PayPass and payWave cards will look and function much like the cards currently used by U.K. consumers. The cards employ a contact-based integrated circuit to authenticate transactions based on a cryptographically protected authentication EMV scheme, in which transactions are approved through data exchanged between the card and reader after the cardholder keys a personal identification number (PIN) into the payment terminal. (This contrasts with the payment approval process in the United States, which uses external payment networks to approve transactions, without requiring a PIN.)

In addition to the contact-based chip, each PayPass and payWave card will contain an embedded RFID inlay and a contactless logo printed on it. Consumers will be able to use the RFID function only on transactions totaling £10 ($20.23) or less. To use the RFID function, consumers will hold the card over the reader, then wait for a chirp or beep to indicate a successful transaction. For transactions higher than that amount, they'll need to insert the card into a reader and key in a PIN.

As a security layer, the banks will require consumers to key in their PINs periodically, thus ensuring that only an authorized cardholder uses that particular card. Oliver Steeley, MasterCard Worldwide's head of strategy and business planning for developed markets in the region, explains that the cards will have the ability to store the number of contactless transactions performed. Once the contactless function has been used a set number of times—or once a set cumulative transaction amount has been reached—the card will prompt the interrogator to request a PIN before authenticating the contactless transaction. The counter will then reset itself back to zero.