When paying with plastic, why swipe? Just wave

[R.A. Hettinga]

<http://news.zdnet.com/2102-9588_22-5589512.html?tag=printthis>

ZDNet News


 By Alorie Gilbert
 URL: http://news.zdnet.com/2100-9588_22-5589512.html
Tired of having to swipe and sign every time you use a credit card?

 Visa is hoping to simplify the process of paying with plastic with a new
payment technology it introduced Thursday. With the company's new
"contactless" system, consumers need only wave credit and debit cards
within a few inches of a reader to complete a purchase. And for purchases
of less than $25, no signature is required.

 The technology will be more convenient for merchants and consumers alike
by reducing checkout times and lines, Visa executives said. It's also
designed to be an easy alternative to cash for small purchases such as a
soda or pack of gum.

 "Our hope is that the contactless payment feature will drive added
convenience and speed to consumers," said Niki Manby, vice president of
market and technology innovation at Visa USA. "You no longer need to swipe
or hand over your card."

 But don't go waving your credit and debit cards around just yet. Visa must
first convince merchants and card issuers to use new equipment. For
merchants, that means purchasing new card readers. For banks, it means
introducing special cards capable of transmitting account data via radio
signal rather than magnetic stripe. So far, no card issuers are offering
them, Manby said.

 With 5.6 million merchants in the United States, Visa will need some time
to phase out its old system.

 "It's not something retailers will do lightly overnight," said Pennie
Gillespie, a Forrester Research analyst.

 Visa is not alone in the endeavor. MasterCard and American Express also
are experimenting with contactless cards. MasterCard has been doing field
tests in Florida, while American Express is doing trials in Arizona and New
York. The companies are using compatible technology, so merchants can use
the same card readers for all three systems. Merchants just need to install
an extra bit of software to make it all work together, said Patrick
Gauthier, senior vice president of new product development at Visa.

 Visa and its rivals have some obstacles to overcome before the technology
becomes more mainstream, Gillespie said. Not only must they convince
merchants to buy new readers, they must assure consumers that the
new-fangled cards are every bit as secure as the old ones in an age of
identity theft and high-tech hacking.

 "Security is a question," Gillespie said. "How easy is it for someone to
interact with a wireless communication and pick up a number?"

 Visa designed its system to be highly secure, with multiple layers of
encryption and fraud detection, Gauthier said. Each transmission between
card and reader has a unique code that cannot be reused even if it is
intercepted, a key security feature, he said. In addition, consumers have
no liability for fraudulent charges with the new cards as with the old
ones, Gauthier added.

 "Security is at the core of our business," Gauthier said. "We are fully
confident that the platform we have developed is as secure as any form of
Visa cards today."


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R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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