MasterCard International’s new OneSMART PayPass, an EMV-based smart card featuring the M/Chip, will enable customers in regions where EMV smart cards predominate, such as Europe, to gain more benefits from contactless payments.
First introduced in Taiwan in January, the new card integrates both contact and contactless chip payment solutions, said MasterCard’s Christina Rae. The cards in Taiwan, she said, will be issued by Cathay United Bank and E. Sun Bank and will initially be used for electronic transportation payments.
“The card was developed to offer PayPass (contactless payment) functionality for countries investing in EMV, while retaining the benefits of an EMV transaction flow for merchants and issuers,” she added.
‘Basic’ PayPass for the U.S.; OneSMART PayPass for the world
While MasterCard last year rolled out its PayPass card in the U.S. after a lengthy trial run, the OneSMART PayPass is designed for the European and other markets where EMV has already been standardized.
“Trials in the United States have shown us that MasterCard PayPass has the potential to replace cash with card payments,” said Pascal Defour, vice president and head of chip product management for MasterCard International, when OneSMART was first announced. “This represents a huge potential for banks and merchants, particularly as a significant proportion of cash payments are made in retail environments where convenience and speed of transaction are at a premium.”
“OneSMART PayPass leverages the presence on the card of the MasterCard M/Chip application to perform the transaction in a manner compatible with the EMV networks rollout out in many countries,” said Ms. Rae. “Typically, issuers in those markets wishing to deploy a contactless program will choose OneSMART PayPass for this reason. For markets such as the U.S. that do not have the EMV-capable infrastructure, the PayPass terminal recognizes any ‘visiting’ OneSMART PayPass card and formats the message accordingly for the mag-stripe infrastructure.”
While OneSMART PayPass won’t be available in the U.S., some travelers may have access to the cards. “Issuers in the U.S. are concentrating on (mag-stripe) PayPass so the additional functionality offered by OneSMART PayPass contact or contactless cards cannot be properly exploited without the EMV acceptance infrastructure,” said Ms. Rae. “U.S. issuers may choose in the future to issue EMV-based M/Chip cards to some segments of their cardholders (e.g., frequent overseas travelers). In those situations, it would be possible to extend the functionality of those M/Chip MasterCard cards with a contactless option based on OneSMART PayPass.”
The experience of using the contactless element of PayPass or OneSMART PayPass will be identical, said Ms. Rae. “Furthermore, PayPass is designed such that all cards, fobs, etc. regardless of type, will work in all terminals.”
How does it work?
OneSMART PayPass combines the security of the MasterCard M/Chip with the speed of contactless payments, she added. OneSMART PayPass cards have a chip and an antenna embedded in their plastic.
“When a card is brought in close proximity to a PayPass-enabled reader, it uses radio frequency technology to transmit account details to the PayPass reader,” said Ms. Rae. “Once payment details have been captured by the terminal, they are processed though the MasterCard acceptance network in the same way as a contact chip payment. The transaction is authorized either online by the issuer host or offline by the card. The card’s on-chip risk management capabilities can also accomplish Card Authentication (CAM) offline. To further speed up a PayPass transaction, requirements such as signature or PIN, may be waived for low-risk, low-value purchases.”
Besides its EMV compatibility, the card has other benefits for both merchants and consumers, similar to what MasterCard found in U.S. trials of PayPass.
“OneSMART PayPass helps merchants to speed customers through the checkout process, increase the average transaction amounts spent (as compared to cash), provide a reliable and trusted payment method that works well in quick-pay environments and attracts new customers. Beyond its speed benefits,” she said. “OneSMART PayPass helps merchants lower their costs and improve productivity. As employees handle and process less cash, they can focus on providing an improved overall customer experience.”
Accepting PayPass-enabled transactions does not require expensive changes at a merchant’s point-of-sale, she added. Merchants can add a low-cost PayPass reader to an existing terminal or introduce an integrated terminal that transacts with a tap or swipe of a card.
With the first cards and terminals now ready for testing, “banks and merchants can trial OneSMART PayPass as an alternative to cash payments,” said Ms. Rae. “Territories that are implementing MasterCard OneSMART contact chip programs will be extending those programs with the addition of OneSMART PayPass functionality in the future.”