With increased customer spending–compared with cash–coupled with decreased checkout time as high as 30-40 percent, American Express continues to pilot its ExpressPay program, recently taking it internationally for the first time.
This contactless technology–a key fob no bigger than a stick of gum that attaches to the user’s keychain–was first introduced in Phoenix, Arizona early last year. It was first limited to company employees in the cafeteria, then extended to include some 170 merchants, and has now expanded to include more than 370 businesses in the Phoenix area, including a pharmacy chain, a hamburger chain, a petroleum supplier, convenience store and two submarine sandwich chains, said the company’s vice president of public affairs, Tony Mitchell.
“We’re seeing significant increases in spending and significant decreases in the amount of time it takes to (complete the purchase) compared to cash or a credit card. Our early results were showing that customer spending was increasing 20% to 30% compared to cash spending and that checkout times had decreased 30% to 40%, compared to using cash, or a credit card, even without a signature,” he said. “We’ve been trying to test out ExpressPay along a few dimensions, making sure the technology works effectively and it does, and has.” Expanding beyond Phoenix, ExpressPay key fobs are now in limited use in New York and New Jersey and were deployed last month in Singapore.
“We’ve always had the view that this is a global capability. We wanted to at least test it out. The primary motivator for us was just being able to test it on a global scale,” Mr. Mitchell added. “Overall, not only in Phoenix, New York, and New Jersey, but also in Singapore, we’ve been very pleased with results. From our perspective, we feel very good about where we are.”
In New York and New Jersey, “we started first in our cafeteria and convenience store and a cafeteria in New Jersey. We’ve introduced it at the Mercantile Exchange’s cafeteria and we?re looking at other locations, such as drug and convenience stores,” he added.
The RFID key fob authenticates purchases at checkout. Users simply hold the ExpressPay key fob next to a companion reader at checkout to make purchases. Payment is authorized in seconds and no signature is required.
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 tracks 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 bankcard transaction. This eliminates the need to conduct costly and time intensive reworking of the backend systems.
You don?t have to be an American Express card holder to participate, said Mr. Mitchell. Consumers have the option of funding ExpressPay in two ways: either a direct link for payment to their American Express Card or as a pre-paid product linked to any major credit, charge or debit card. ExpressPay Direct Link, with a daily spending limit of $150, links to any consumer American Express charge or credit card for payment–with individual charges recorded directly on the monthly billing statement. ExpressPay Pre-Loaded can be pre-paid up to $600 monthly using any major credit, charge or debit card and can be automatically reloaded from the same payment source when the balance goes below $20.
Why a key fob?
“We did some focus groups and we asked about whether they preferred a keychain or a card,” said Mr. Mitchell. “The group was somewhat split, but more people said they liked it on a key fob, but not by a significant margin. Based on that, we introduced it in the key fob form factor but we always knew we would eventually develop the capability for it on the card as well. That’s one of the things about RFID and smart chip technology. That same capability can be in a variety of form factors.”
He had no specific data on when the card might be available.
“Whether it’s on a key fob or a card, we need a point-of-sale terminal that can accept RFID transactions,” he said. “That’s been one of the things we’ve seen in general positive development. We’re seeing a lot of interest from terminal manufacturers who are upgrading their terminals. It is always important to us to make it easy to be implemented at the merchant level.”
Driving this are the two major bankcard issuers, Visa and MasterCard. “They have all agreed to use a similar technology standard. The merchant doesn’t want one terminal for American Express and another for MasterCard,” said Mr. Mitchell.
He would not disclose the number of users in any of the market areas currently testing ExpressPay. “Certainly our target in Phoenix is to get between 10,000 and 20,000 users,” he added.
American Express is also looking at doing more with ExpressPay in New York. “Recently, we signed up New York Waterway, the ferry terminal system. ExpressPay can now be used to purchase passes,” said Mr. Mitchell.
“We’ll spend this year continuing to grow and expand what we’ve been doing,” he concluded.