contactless payment, page-6

Closer to cashless
On-the-go purchases now just a tap away
The Denver Business Journal - March 31, 2006by Renee McGawDenver Business Journal
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Time is money, particularly at the checkout counter.

That's why contactless payment cards will be increasingly visible in Colorado this year and beyond, backers say. The cards, which are equipped with a radio frequency chip, need only be waved about 2 inches from a reader to process transactions under $25 -- no swiping or signature is required.

Contactless cards trim average transaction times by about 12-18 seconds compared with cash, according to MasterCard. And because they don't need a magnetic strip to work, they can be made in any shape or size -- as a key fob, for instance, or attached to a pager or mobile phone.

Chase Bank rolled out the first contactless credit cards, called "blink" cards, in Colorado last June, issuing about 500,000 of the cards to cardholders statewide. KeyBank followed in September, when it began replacing existing Colorado cardholders' debit cards with MasterCard Paypass debit cards.

KeyBank said in February that it was about halfway through a nationwide rollout of about 2 million cards.

"What we're finding is that as our customers receive it, they like the concept of fast and convenient at the checkout," said Carl Stauffeneger, senior vice president of payment products at Cleveland-based KeyBank. "For smaller transactions, where [customers] would spend cash more frequently, now they don't have to carry that cash or worry about the time it takes to break a $10 or a $20."

It also allows card issuers to capture more under-$5 transactions, for which most people tend to pull out cash instead of credit cards. Many market watchers also assume that the "tap-and-go" cards will encourage consumers to make more frequent small purchases, although data so far is sketchy.

At the moment, 73 merchants accept contactless credit cards in Denver, according to the MasterCard Web site. These include 7-Eleven, McDonald's, Arby's, Walgreens and Ritz Camera stores, as well as AMC Theaters and Regal Entertainment Group theaters.

The more places that consumers can use the cards, the more popular they will be, so getting more merchants onboard is crucial.

"We expect to see a lot more merchant pickup in 2006 and beyond," said T.J. Sharkey, vice president of business development for U.S. acceptance at MasterCard International in New York. He said MasterCard was hoping eventually to reach beyond national chains, to get the card readers into independent and local stores.