HSBC Joins the Ranks of Issuers of Contactless Debit Cards

HSBC Bank USA N.A. has become the third U.S. bank to add contactless payment technology to its debit cards. The bank said today it has begun issuing MasterCard-branded debit cards equipped with MasterCard's PayPass system, and plans to issue 1 million of the cards by the end of the year. Although KeyBank and Citigroup Inc. have already announced plans to add contactless technology to their debit cards (Digital Transactions News, Aug. 24), HSBC says it will be the first bank to completely switch out its debit card base with contactless-enabled cards. PayPass includes a chip-and-antenna inlay in the card that can transmit account data stored in the chip, replacing the conventional card swipe at the point of sale. Cardholders pay by waving their cards near, or tapping them on, point-of-sale transceivers that pick up the radio signal from the cards and pass it on to point-of-sale terminals. From that point, transactions proceed as if the card had been swiped, though the radio-wave technology is said to considerably speed up tender times, potentially increasing the attractiveness of card acceptance to high-throughput merchants where cards were formerly considered too slow. At certain merchants, both Visa U.S.A. and MasterCard have waived the requirement for a cardholder signature for payments under $25, further speeding up transactions. Visa and American Express Co. have introduced contactless payment platforms as well that operate on the same international technical standard as PayPass. Current holders of HSBC Bank's debit cards will receive the new contactless cards automatically. HSBC Bank is the principal subsidiary of HSBC USA Inc., an indirectly held, wholly owned subsidiary of HSBC North America Holdings Inc. Unlike HSBC and KeyBank, Citi's plan is to issue key fobs rather than cards equipped with contactless technology. Its plans call for issuing 2.5 million of the devices to its debit card customers.