American Express is taking its ExpressPay contactless payment pilot to as many as 30,000 individuals in Phoenix, Arizona. In March, ContactlessNews reported that American Express had been piloting contactless payments with 1,000 of its employees in its Phoenix offices. Using a small plastic card about the size of a stick of gum that attaches to the user’s keychain, payments could be initiated by waving the keys near the point of sale (POS) device. The project has now been expanded to include the general public and a wide variety of area merchants.
“We have already signed up more than 175 merchants to accept ExpressPay,” says David Bonalle, American Express vice president and general manager of advanced payments development, “and this number is growing quickly.” They intend to continue to add merchants as the pilot develops.
The merchant list consists of broad range of locations where speed and convenience is important, such as quick serve restaurants, supermarkets, convenience stores, and gas stations. The initial list of participating merchants includes Carl’s Jr. restaurants, Schlotzky’s Deli, Quick Copy Printing, and many others (visit www.americanexpress.com/expresspay for a complete list).
In targeting merchants to participate in the program, Mr. Bonalle says, “we have focused on Scottsdale as the core and have tried to get as much there as possible, but many merchants have multiple locations (throughout Phoenix).”
Targeting cardholders is well underway and will be an ongoing effort. Unlike MasterCard’s PayPass trial underway in Orlando, Florida, ExpressPay will target both existing American Express customers and non-customers. MasterCard’s program targeted cardholders from the three participating issuers—Chase, Citibank, and MBNA.
According to Mr. Bonalle, they are marketing to American Express customers via email and direct mail. For the general public, they are using traditional advertising, take-ones (flyers) in merchant locations, and event marketing strategies.
The inlay for the keychain is produced for American Express by Texas Instruments RFid Systems (TI-RFid) using ISO 14443 Type B compliant technology. TI-RFid is also producing the POS add-on that enables a merchant POS device to accept ExpressPay.
The contactless token contains an encrypted version of the data from track one and two of a traditional magnetic stripe payment card. This data is communicated to the POS device via an attached ExpressPay reader. To the POS device and the American Express payment network, the data looks like and is treated like any other normal transaction. This eliminates the need to conduct costly and time intensive reworking of the backend systems.
When asked what they hope to learn from the pilot, Mr. Bonalle replied, “we want to see if value is created for all parties as we have seen from our tests to date. And we are testing out the business case from the American Express perspective.”
As for this business case, he suggests that they are very confident in the profitability on $10 and above transactions and suggest a preference for the $10-50 merchants that benefit from speed and convenience. “When you get over the $50 merchant,” say Mr. Bonalle, “it will likely require signature verification, PIN, or something else.”
According to Bill Allen, Marketing
Communications Manager, TI-RFid, the value proposition is strong for all parties. For card issuers, he says, “contactless technology can reduce fraud, which currently can run up to 2% of top line gross receipts.” Merchants benefit from increased customer throughput, higher transaction values, and reduced cash handling expenses. Consumers enjoy added convenience, transaction speed, and a more secure payment device.
Adds Mr. Allen, “TI has long believed that contactless payments brought value to all parties in the chain. The rollout of ExpressPay by American Express further validates this vision.”
Though officially scheduled to last for 6 months, Mr. Bonalle suggests that they are already seeing reason to extend the project.