Wendy Atkins reports on groundbreaking developments taking place in the world of consumer payments, including contactless mini cards.

There is always plenty of excitement surrounding the launch of the latest ‘must-have’ gadgets and gizmos, whether it is one of the new iPods, PlayStations or Wii consoles. So it seems strange that so few show the same enthusiasm for the simple payment card that is currently on the verge of revolutionising life for everyone.

It is a pity really, considering that some of the best technology brains are working on a finest of contact and contactless chips to increase transaction speeds, make life more convenient for consumers, and open new markets to banks and financial service providers.

In many parts of the developed world electro magnetic vehicle (EMV)-based Chip and PIN technology is old news. However, Canada is only just joining the party, with a spa and salon in the Toronto area becoming the first location for a Chip and PIN transaction made with a Canadian MasterCard in a real-world retail location.

Across the Atlantic, MasterCard Europe is also building on EMV technology with five banks in Finland (Aktia, Ålandsbanken, Nordea, Sampo Bank and Tapiola Bank) set to introduce an EMV-based multi-function payment card that can combine debit and credit accounts on a single card. MasterCard Europe says: “With the Sepa [single euro payments area] and the mandating of standard EMV technology, the magnetic-stripe technology combo card that is already on offer in Finland could be upgraded to work for consumers the same way across Sepa and the globe, wherever EMV terminals are available.

“MasterCard will be taking this innovation across Europe to the benefit of other banks, merchants and consumers.”

The company is also working with ValuePOS, a point-of-sale technology provider, to deliver a mobile terminal based on GSM technology. According to Luke Olbrich, senior business leader, Sepa Solutions, MasterCard Europe: “This phone/terminal enables the taxi payment, the doorstep pizza delivery or the stadium popcorn purchase to be made just as easily, as quickly and as securely as using a terminal in a shop or a restaurant.” In the UK, a new type of credit card is being launched, World MasterCard, aimed at the financially savvy mass affluent market.

Wristwatch payments

Contactless chip developments are also helping power a whole new range of payment devices. Earlier this year, MasterCard Worldwide, in partnership with Turkey’s Garanti Bank, launched a watch equipped with PayPass contactless technology. Using the watch, consumers can make payments at more than 600 merchant locations in Turkey, including major names such as Burger King, Starbucks, Cinebonus, TAV (Istanbul Atatürk Airport Otopark) and the Istanbul Ferry Corporation.

Visa has also been working on new form factors as part of its device evolution strategy. “When we launched the payWave programme in 2005, we introduced a standard magnetic stripe card with the chip and antenna embedded inside to provide our cardholders with two ways to pay,” explains Pam Zuercher, vice-president, product innovation and co-ordination, Visa USA. “Today we have 10 million of those payWave cards worldwide.”

In March 2006, Visa launched the Contactless Mini Card, a device about half the size of a traditional payment card. It can be carried on a key ring and is issued as a complementary card to a Visa credit or debit card. More recently, the firm announced the Micro Tag, a key fob payment device embedded with payWave technology. “The Visa Micro Tag is the smallest payment device that we’ve issued to date [about half the size of the Mini Card],” explains Ms Zuercher.

Like the Contactless Mini Card, the Micro Tag is designed to be a companion device to existing credit, debit or prepaid accounts, and attaches to a key ring to enable cardholders to pay by waving it in front of a contactless payment terminal.

Technology convergence

The development of contactless chip technologies has played a role in the convergence of industries, with mobile phones providing the link between transactions, information and telecoms. In the US, passengers can tap their MasterCard PayPass-enabled device on a contactless reader attached to a VeriFone-integrated payment and information system located in the back seat of any participating New York City taxi. From their seat, passengers can access a VeriFone passenger information monitor that offers news updates, restaurant information and up-to-date traffic and weather reports.

Visa says it has also been doing work in the mobile arena to extend functionality beyond payWave. In October, Visa USA began trialling payWave and mobile phones with banking and financial services company Wells Fargo. During the trial, Wells Fargo customers can download their existing debit or credit accounts to their phone and make their purchases at any merchant location accepting payWave.

They can also receive mobile offers to their phone and integrate their mobile banking application, giving them access to multiple functions on the phone that are financially oriented.

Although up to now consumers have shown little interest in the ground-breaking developments taking place in the world of traditional payments cards, the role of chips in making smarter payments using devices such as watches, telephones and key fobs could at last be something for them to really get their teeth into.

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