A panel of ID industry experts provided predictions for 2005. One of these glimpses into the future will appear here each day during December.
by Murdo Munro, Vice President, Mobile/Wireless, MasterCard International
MasterCard is planning a major launch of MasterCard PayPass™, a new “contactless” payment program that provides consumers with The Simpler Way to Pay™, in early 2005. From successful market trials in 2003 and 2004 to McDonald’s recent agreement to accept PayPass at select U.S. locations, MasterCard is leading the way in firmly establishing contactless payment solutions among merchants and consumers as a preferable alternative to cash at fast-serve and other merchant locations.
Market Trials and Momentum
Using MasterCard PayPass, consumers simply tap their payment card, or alternative PayPass form factors, such as a key fob, tag or cell phone, on a specially equipped merchant terminal, eliminating the need to swipe through a reader. The new solution is ideal for quick payment environments, such as quick serve restaurants or gas stations, or where environmental factors have prevented readers requiring card insertion or swipe, such as parking meters.
MasterCard’s market trials in Orlando and Dallas in 2003 confirmed that consumers find MasterCard PayPass to be simple, quick and convenient, and place a high value on the added security they receive from retaining possession of their card while paying. Merchants realized significant time-savings and increased transaction volume, while issuers benefited from increased cardholder usage and activation of previously dormant card accounts.
In 2004, MasterCard continued to receive a strong “vote of confidence” from the merchant community, as evidenced by McDonald’s August 2004 agreement to accept MasterCard PayPass at select restaurants in the U.S., scheduled to begin in Dallas and the New York metropolitan area in late 2004 and at additional locations in 2005. As for institutional partnerships, MasterCard recently joined with MBNA and the Philadelphia Eagles to launch the Eagles Extra Points Rewards Program, featuring PayPass, and with J.P. Morgan Chase to conduct an employee-launch of PayPass, using several form factors, at Chase’s New York City offices and local eateries.
In October 2004, Motorola announced that it will conduct a field trial of mobile phones enabled with MasterCard PayPass and Near Field Communications (NFC) technology, allowing consumers to enjoy the benefits of simpler and faster transactions conducted with their mobile phones. NFC technology enables the device to run multiple proximity applications as well as payment. In the future, these may include applications such as contactless ticketing for mass transit or events. Applications can be loaded into the secure area of the phone ‘over the air,’ offering potential operational savings to card issuing financial institutions, as well as revenue opportunities to wireless network operators.
As for security issues, MasterCard PayPass transactions are in many cases safer than traditional card payment transactions. A PayPass card or device contains a chip that incorporates enhanced security technology to further prevent fraud and the contactless features allow the device to remain in the consumers hands.
Looking ahead to the mass market launch and beyond, MasterCard is proceeding with plans for MasterCard PayPass deployments in additional locations that meet the requirements of its issuers, retailers and the growing base of contactless payment suppliers and partners.
Visit MasterCard Paypass on the web at www.paypass.com.
Explore more developments dealing with the implementation of Near Field Communications, a short-range wireless technology that promises to revolutionize contactless identification, payment, access, and more. Click to visit NFCNews.