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Credit Cards InformationContactless Payments: Where's Debit and who wish benefit
by:
Jeremy Drzal
The electronic payments industry has seen rapid change in the last 24 months from the position of payment mix (decreased checks and cash, with accumulated debit and all but flat credit purchases) to the advancement of new form factors such as EMV smart cards in Asia, Europe and parts of South America, to new contactless technologies such as PayPass (MasterCard), Wave (Visa), ExpressPay (Amex) and QuicPay (JCB). The user
base of accountholders has quickly responded to the new RFID form factor because of its simplicity, speed, and convenience. Retailers have as well responded well considering the increase in sales, quicker
transactions and in many a cases, higher spend versus its cash equivalent. It as well provides less wear and tear on hardware with fewer moving parts to further decrease maintenance and replacement parts.
With the rapid adoption and come to put cards out into the market, some large credit card issuers have declared
programs including Chase, Citi, MBNA. Larger retail chains have as well got behind to keep the programs as well including 7-Eleven, McDonalds, Meijer’s, Ritz Camera, and Majestic Cinema to name simply a few. The most recent announcement has been the long unheeded debit program from KeyBank, the 1st contactless program announced. Citibank followed shortly after. Some
are MasterCard.
From an issuer’s perspective, they can introduce the contactless payments through either credit or debit programs. Tho'
most have been credit programs as mentioned above. However, the nature of the program is for low-value payments under $25. This is the target market debit programs mostly serve. The largest incomprehensible opportunities are in debit programs. One of the largest undeveloped
markets lays inside
the large and national debit programs for two primary reasons. Firstly, the nature of the contactless programs are to displace cash at the low-value payment level. Debit is the most logical and user
bound programs to address this demand.
Secondly, debit card issuers have been mostly absent from previous card technology programs such as EMV. EMV and smart card programs/pilots have been mostly evaluated by credit card issuers. These credit card issuers have knowing the lessons of chip and new technologies and they are in a strong position to capitalize on the contactless programs through the technology teams from past smart card programs. Since they may lack some
the internal resources and the product (contactless feature) for low-value payments, they wish likely lose significant competitive advantages by not being first-market movers. Wish debit card issuers have the level of skillfulness
to appraise and build the requirements or programs necessary to deploy contactless card programs?
Consider the following: - McDonalds wish now accept PayPass at their stores and different small value retailers (under 25$) are sharply
upgrading their POS systems to accept PayPass transactions. - The pilot for PayPass was conducted by MBNA at the Metropolis Seahawks arena (on credit cards). August 22 pre-season Weekday
night football game had all 400 terminals inside
the Seahawks arena mistreatment PayPass. - The Washington Redskins FedEx arena wish be acceptive
PayPass. - The nature of tap-n-go is to not take the card out of the wallet, simply “tap” the wallet. This means the user
wish likely only have ONE contactless card in their case as the primary card of select fashioning 1st market advantage critical. - Tap-n-go is typically for low-value payments below $25. This coincides with debit purchases as well and the direction the associations are moving in dynamic the chargeback and dispute rules - As a longer-term strategy, RFID allows issuers to partner with non-traditional players for value additional services including key FOBS, stadiums, ticketing, campus, transit, etc. As part of this overall direction, the card associations are seeking partnerships with banks and large municipalities to offer community based services (parking, transport etc) that represents an increase in spend for all parties. - MasterCard has declared
a Transit Ticketing application under development to integrate or displace on an individual basis issued transit tickets with an Association based card. - Asia as well as different markets are quickly dynamic direction or re-evaluating traditional EMV contact smart card programs to leverage contactless EMV protocol in either a fully contactless card or a combination contact/contactless card. - Near Field Communications is sanctionative mobilcom operators and device providers to become an integral part of “wallet” consolidation by connection payment devices with a handset.
It’s for certain a time filled with a lot of changes, please stay posted.
Just simply about the author:
Jeremy Drzal has over fifteen years experience in market strategy, product development/management, sales and business development in the technology, payments and risk management area. You can see much simply about the payments industry at www.allpaynews.comor visit www.keypoint24x7.comto inquire how he can help with your project
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