U.S. Bank Joins Growing List of Banks Testing Contactless Payment

U.S. Bancorp reported this week that it would start testing Visa Contactless credit cards by the end of the month in the Denver area. The test will involve an undisclosed number of cardholders who would be able to use the cards equipped with radio-frequency identification (RFID) chips at about 600 area merchants that have chip-reading point-of-sale terminals. “We're always looking for opportunities to provider easier, quicker ways for customers to pay,” says Lynn Heitman, senior vice president of retail payment solutions at the bank. In a news release, U.S. Bank cited Visa USA data saying the average contactless card transaction is about 25% faster than a cash transaction. Minneapolis-based U.S. Bank will review test results at the end of 2007's first quarter before deciding on its next move in contactless, according to Heitman. Citing competitive reasons, she refused to say how many cardholders would get the chip cards, which also have conventional magnetic stripes. Heitman calls the pilot “a broad test” within U.S. Bank's pool of Denver-area cardholders, though the issuer did approach certain cardholders it determined as likely to be receptive to the idea of using a contactless card. National merchants that already accept Visa Contactless include McDonald's Corp., Walgreen Co., 7-Eleven Inc. and movie-theater chain Regal Entertainment Group. Some of the Denver contactless-accepting merchants are clients of U.S. Bank's merchant-acquiring affiliate, Nova Information Systems. U.S. Bank, which has 4.4 million credit cardholders nationwide, is the No. 2 bank by deposits in the Denver area, behind archrival Wells Fargo & Co. San Francisco-based Wells started issuing Visa Contactless credit cards this year and expects to have 400,000 in issue by year's end. Other banks testing or rolling out contactless cards or tokens include JPMorgan Chase & Co., Citigroup Inc., HSBC Bank USA N.A., and KeyBank. All four of these institutions have introduced contactless debit cards or fobs. Chase is the only one that has rolled out both contactless debit and credit products. In related news, USA Technologies announced late last week it is deploying contactless readers to some 5,000 self-service devices, including vending machines, in various cities around the U.S. The readers will work on MasterCard Worldwide's PayPass platform. This deployment follows an earlier rollout by USA Technologies of contactless capability to 1,000 vending machines in Philadelphia (Digital Transactions News, June 28). Converting to cards small transactions normally done with cash is a big reason for Wells's initiative. “Contactless has offered us an opportunity to capture more micropayments,” Peter Ho, product manager of Wells Fargo Contactless, told this newsletter's sister publication, Digital Transactions magazine, for a story about micropayments in its November-December issue. “We saw an opportunity to make our card top of wallet.”