Prospects for New Payment Devices

At the annual conference of the Electronic Transaction Association in April, various speakers offered their views on the likely growth prospects for various new electronic payment devices. Their overall take: most of the new handheld payment devices such as miniature credit cards, smart cards, and Radio Frequency Identification-based systems (RFID) will be slow to catch on here in the United States.

Perhaps the device with the best prospects is the very successful RFID device that was issued as the ExxonMobil Speedpass. About 6 million ExxonMobil customers carry a key fob (small plastic device that fits on a key ring), that, when passed over the appropriate spot on the gasoline pump, activates the pump and transmits payment information that is linked to a credit or debit card. The Speedpass product has proven to be extremely popular. Similar technology is used by transponders that automatically debit highway tolls to a user's account. In addition to the convenience factor, another advantage to the customer of this payment technology is reduced risk of theft of the account number. Since the device transmits the appropriate account number to the receiver and no number appears anywhere on the device, there is less risk of compromising the customer's account. Several large card issuers are experimenting with a similar product using MasterCard's Paypass technology. In the Orlando market, Citigroup, J.P. Morgan Chase and MBNA are testing card equipped with a transponder to customers who can wave them in front of point of sale terminals at participating merchants.