Pay and wave: New credit card technology promises to speed up transactions
November 18, 2010
Someday you may not swipe your credit card to make a purchase. You'll simply wave a specially made card or your cell phone in front of a payment reader. The transaction is called a contactless payment, and it's supposedly the next big thing, although experts have been saying that for a few years now.
The United States is actually behind the curve when compared to with other developed countries, where contactless payments have already started taken off.
In Malaysia, for instance, Visa teamed up with Maxis, the largest wireless carrier in the country; Nokia, the cell phone maker; and Maybank, a leading bank; to offer Visa payWave on cell phones. This is the company's first commercial mobile payment program that lets consumers make payWave-enabled transactions.
A host of retailers in England have rolled out contactless payment systems that use special card readers and contactless credit cards. The cards are equipped with a chip that emits a wireless signal that the reader picks up when the card is held close to it.
But a number of new developments have been announced here recently that signal contactless payments could take off in the United States in coming years.
Contactless credit card payments: The end of the swipe?
• Visa announced in September 2010 that New York transit riders will be able to charge their fares on their credit card accounts simply by holding their cell phones or credit cards - enabled with a wireless Visa payWave chip - in front of transaction readers. Another program in Los Angeles lets LA Metro system riders pay by waving a special prepaid Visa card in front of a contactless payment reader.
• Bloomberg reported in August that AT&T, Verizon Wireless and T-Mobile USA may work with Discover Financial Services and Barclays Plc. to test a contactless payment system in Atlanta, Ga., as well as stores and locations in three other U.S. cities. The companies have yet to announce the project publicly.
• Citi announced in June the introduction of MasterCard "PayPass" stickers for most of its credit cards. The stickers can be affixed to the back of cell phones and used to make contactless payments at some 230,000 merchants that accept PayPass transactions, the company said in a statement. The company also rolled out a PayPass locator application that searches and maps the nearest merchants accepting the payments.
It may be a while before contactless payments become the norm here. The Guardian in England recently reported that contactless payments began there three years ago, but the trend was mostly centered on London and confined to restaurants and coffee shops. Only now is it starting to take off nationwide, although grocery chains have yet to climb on board.