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Is the world ready for 'wave and go' credit card payments?
"People are always asking what the heck it is..."

By Alorie Gilbert

Published: Monday 22 December 2003

'Contactless' technology being trialled by MasterCard promises to make credit card transactions as simple as waving the card in the air and the company appears ready to roll out the service across the US next year.

The company's PayPass system is designed to let holders of credit and debit cards tap or wave their cards in front of a PayPass reader to make a payment, rather than swipe the cards through a reader and sign their name.

The company hopes the speedier process, which MasterCard has been testing with a number of retailers in Orlando, Florida, during the past year, will replace cash transactions at quick-service businesses such as cinemas, petrol stations and fast-food restaurants.

One analyst predicted that MasterCard's move to expand adoption of the technology, and similar efforts at American Express, will push so-called contactless payments - more common in Europe - into the American mainstream within the next year or two.

Ed Kountz, an analyst at the Tower Group, said: "2004 is going to be an inflection-point year in terms of consumer awareness and availability."

The PayPass cards contain a special microchip that transmits account details wirelessly, using radio-frequency identification (RFID).

American Express has developed a similar payment system, called ExpressPay, which uses a keychain fob instead of a card.

The goal of the Us-wide launch is to build a critical mass of both PayPass cardholders and retailers, said MasterCard vice president Murdo Munro.

But if the Orlando trial is any indication, MasterCard faces a classic chicken-and-egg dilemma: consumers are unlikely to take an interest in PayPass unless enough retailers support the system, and retailers are reluctant to invest in PayPass equipment until enough customers use the cards.

Several McDonald's store managers that participated in the Orlando trial expressed disappointment in the technology because so few customers had used it.

Chung Tran, a manager of one Orlando McDonald's, said he'd seen PayPass used only about three times during the past year. "People are always asking what the heck it is," Tran said of the PayPass reader.

Alorie Gilbert writes for News.com