By Dee Karawadra
First came fast food restaurants. Then, drive-through windows followed by bankcard acceptance at said windows. Now, it's contactless payments for hungry customers zipping through drive-through lanes.
ViVOtech's ViVOpay contactless payment solutions, as well as those of major card issuers, are powering this phenomenon.
Contactless payment systems enable customers at gas stations, grocery stores, fast food restaurants and on buses to wave their cards in front of specially equipped readers and, voil…, their transactions are complete.
Several ViVOpay system models are tailored to different merchant needs, from fully integrated wave and card-swipe systems to add-ons for existing POS terminals.
Contactless systems accept payments with credit, debit, gift and loyalty cards. There are even models for vending machine integration.
American Express Co., Discover Financial Services LLC, MasterCard Worldwide and Visa U.S.A. have all launched versions of contactless payment cards.
ExpressPay by AmEx, Discover Zip, MasterCard's OneSmart PayPass and Visa payWave are all available for consumer use through the issuers and select banks. Their aim is to push contactless payment into the mainstream.
Through some banks, including Washington Mutual Inc., Bank of America Corp. and JPMorgan Chase & Co., an increasing number of consumers are being issued contactless cards. Retailers like BP America Inc. are already upgrading their technology to accept these cards.
With all this preparation and widespread fanfare throughout the industry, is it time for ISOs and merchant level salespeople (MLSs) to actively promote these systems and the cards they accept?
When big companies jump on the bandwagon, as they have in this instance, you would suspect it's going to be a big deal sooner rather than later.
MLSs need to expand their knowledge of this form of payment and make sure they can quickly and accurately answer all of their clients' questions and concerns about the products, from processing to POS terminal costs and operations.
But how safe is this technology? You may have seen the news reports on how thieves can easily steal card data using homemade devices. But how easy is it, really?
On its Web site, MasterCard stated, "With secure encryption technology and Zero Liability protection, PayPass is as safe as your regular card."
So what kind of merchants can benefit from this product? Quick service restaurants, convenience stores, gas stations and pharmacies, to list just a few.
Also, any business with heavy traffic that needs speedy service can utilize this technology. Many merchants qualify for the small-ticket designation, which does not require signature on purchases under $25. This can help sell the product.
According to Visa, over 32,000 locations accept its PayWave system. However, the issuers are only targeting certain areas initially.
In some regions of the United States, you will not find many merchants who are set up to accept contactless payments. The issuers have yet to start disseminating these chip-embedded cards.
This makes it difficult for the feet on the street to promote and sell the new technology. The MLS Forum weighs in Unfortunately, the response to my post about this topic on GS Online's MLS Forum was tepid. Maybe this is due to the fact that the initial contactless buzz has faded.
MLS Forum member MTY MSI predicted contactless payments will become commonplace in high-volume retail applications.
"In my area, a very large regional general merchandise/grocery chain has been using it for over a year now, and I constantly see Visa/MasterCard TV ads promoting contactless pay," MTY MSI wrote.
Endorsements from major retailers will help promote the technology. This is great news for MLSs because it can help promote the product.
Contactless technology already facilitates payments for cell phone users throughout Europe.
Of course, this does not necessarily mean it will take off here. We have seen other trends in Europe that worked (pay-at-the-table, for example) but have stalled here.
Another concern: Is this going to resemble the smart card frenzy of the late 1990s that fizzled like the high-tech boom of that era?
I believe contactless technology will succeed in the United States because major card issuers have spent millions of dollars marketing the idea. However, it will require joint efforts among issuers, processors, ISOs and MLSs to make it happen.
Judging from the direction of this trend, it's likely that contactless cards will become a primary form of payment used in everyday life across the country.
Agents need to be educated and positive about this development in order to be competitive in this constantly changing industry.
"My MasterCard debit card has been contactless for two years, and I think it's just a matter of time (probably less than two years) before the majority of cardholders have contactless cards," MTY MSI said.
I certainly hope that's true. However, if merchants perceive no demand for these cards and consumers have no place to use them, all the promotional efforts on behalf of contactless payment acceptance will be a waste of everyone's time.
Safari njema: Safe journey.
Dee Karawadra is the founder, Chief Executive Officer and President of Impact PaySystem, based in Memphis, Tenn. He and his team have a wealth of knowledge on the merchant services industry, with a niche in the petroleum market. Dee's experience on the street as an agent has guided him in laying a foundation for an agent program that is both straightforward and lucrative for his agents. Contact him at 877-251-0778 or firstname.lastname@example.org.
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