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After an extended testing period, Discover Financial Services is rolling out its Discover Zip contactless payment system. The card network says an undisclosed number of cardholders began receiving contactless cards in the mail Nov. 15, while others received contactless stickers that attach to their mobile phones or other items. More cardholders will get cards and stickers beginning in January, and any Discover cardholder can request one by calling a toll-free telephone number.
Despite not making the official rollout announcement until Monday, long after MasterCard Inc., Visa Inc., and American Express Co. went to market with their respective PayPass, payWave, and ExpressPay contactless cards, Discover says it has been a major player in developing contactless payments.
“Discover has played a leading role in contactless technology working with reader manufacturers to certify contactless readers for many years, and was the first to test credit-based contactless stickers,” Mark Scarborough, senior vice president of cardmember marketing, tells Digital Transactions News by e-mail. “Discover has also run several employee tests and published its findings on how to ensure the Zip consumer experience is solid, so we are not new to the contactless space. One of the ways that we differentiate ourselves from our competition is by being an advocate for our customers. We did not want to roll out a technology that wasn’t market-ready, and we wanted to provide a merchant-acceptance base that would be meaningful to our cardmembers.”
Discover gave Zip a shake-down in employee tests at its Riverwoods, Ill., headquarters and operations center in Salt Lake City, Utah. Scarborough says Discover learned from those tests “that contactless stickers can help build near-term transaction volume and a top-of-wallet position for issuers, while advancing consumer awareness of contactless payment options. We also learned a great deal about the user experience—including the activation process and ease of use—as well as the importance of sticker placement and form factors for consumers.”
Some employees using stickers attached to their mobile phones with metal casings encountered problems caused by interference with the radio waves between the sticker and contactless reader. Contactless cards and stickers use radio-frequency identification (RFID) technology. Discover’s sticker supplier made several modifications to correct the problem. Scarborough says it’s nearly impossible to eliminate all interference from phones with metal casings, but adds, “We are pleased with the performance of these stickers on a wide variety of mobile handsets and believe they will provide our cardmembers with an excellent payment experience regardless of the mobile phone that they own.”
Discover, which signs large merchants directly, says Zip is accepted at more than 100,000 U.S. locations, including participating locations of McDonald’s, Burger King, 7-Eleven, Meijer, DQ (Dairy Queen), Whataburger, The Home Depot, and others. Also, the approximately 100 bank card acquirers that sign small merchants for Discover typically will automatically enable Zip when they sign merchants for MasterCard PayPass and Visa payWave acceptance. “We believe the merchants that value speed and convenience at the point of sale will be very receptive, including quick-service restaurants, gas station and convenient stores, retailers and pharmacies, and public-transit agencies,” says Scarborough. Discover is working to add Zip acceptance to the terminals of a “small number” of merchants that deployed contactless terminals before Zip was ready, he says.
Zip is not to be confused with Discover’s participation as the payment card network in the new mobile-payments venture dubbed Isis from wireless phone companies AT&T Mobility, Verizon Wireless, and T-Mobile USA, and card issuer Barclaycard U.S. Isis uses near-field communication (NFC) technology to transfer data between card and terminal, a technology many observers see as the best alternative for turning mobile devices into payment devices. NFC’s widespread adoption has been hindered by disagreements between banks and telcos over revenues and control of data. “Discover’s affiliation with the joint venture Isis is separate from this rollout, but further demonstrates our commitment to mobile payments today and underscores our desire to enable consumers to interact with their chosen form of payment,” a Discover spokesperson says.
