MasterCard Readies Rollout of Contactless Payment

MasterCard announced today its test of contactless chip cards in Orlando, Fla., was encouraging enough for the card company to roll it out to all members as a feature on MasterCard credit, debit, and stored-value cards. The company expects the expansion to begin next summer with the addition of new issuers and merchants. The nine-month Orlando pilot, which ended in September, involved cards equipped with chips capable of communicating via a radio-frequency circuit with special readers installed at the point of sale. Cardholders tapped their cards on the reader to complete the transaction. Key findings in the pilot were: Average transaction size was $21; 80% of all transactions were under $25, and of these 45% were under $10; transaction volume at participating merchants increased 23% over the year-ago period; occasional cardholders increased their usage; there was a 15% activation rate on formerly inactive accounts–“There's a positive link to activation,” Art Kranzley, chief e-business officer for MasterCard, noted today in a press briefing; transaction time at drive-throughs fell by 12 to 18 seconds. The pilot embraced 60 merchant locations, including fast-food outlets, gas stations, and pharmacies, and 16,000 cardholders. Although the pilot is over, acceptance of the PayPass card, which also functions as a conventional payment card, continues with the participating merchants. A separate MasterCard pilot in Dallas incorporating the same technology but relying on chip-equipped cell phones rather than cards at a handful of merchants is scheduled to end next month. Depending on the results of that test, the rollout of the technology may include form factors other than cards. The results so far are encouraging: MasterCard says the Dallas PayPass transactions are running six seconds faster than transactions on cards.