RFID Payment Systems Take Off

A new report says the use of contactless smart cards and other RFID 
payment systems will continue to rise  

Within five years, RFID payment systems will be as common as credit 
card payments in fast food restaurants, video stores, movie theaters 
and other outlets that do a lot of low-value transactions. That's the 
conclusion of a new study by Celent, an IT research and consulting firm 
to the financial services industry.  

The report, titled "Contactless Payments: Replacing Cash with 
Convenience: The Case for RFID," was written by Ariana-Michele 
Moore, a senior analyst at Celent. She interviewed merchants, 
consumers, and such companies as Texas Instruments, MasterCard, 
and Bank of America. The study indicates that there are enough 
benefits for consumers, merchants and banks to overcome obstacles 
to adoption, which include consumer concerns about security and 
investments in new equipment that merchants would have to make.  

Celent's study focuses on markets that have a lot to gain from speedier 
transactions on purchases between $20 to $100. Contactless payments 
offer convenience for consumers, because it can reduce transaction 
times and eliminate long lines at theaters, fast food restaurants 
or when buying lottery tickets on a big jackpot night.  

Moore points out that contactless payments are executed in close 
proximity to the reader, lessening the likelihood of interception. That 
should reassure consumers that the technology is safe. And losing your 
key fob or contactless smart card shouldn't be a problem. "Most banks 
will deploy the same liability limits to RFID devices as they do to 
credit cards," says Moore.  

Merchants will have to invest in new point-of-sales equipment, plus 
software, integration and processing costs. "They will also lose part 
of their traditionally cash-based revenue to merchant discount fees," 
Moore says. But the report suggests that those merchants who have 
participated in early pilots are satisfied that these costs would 
be offset by the increase in sales that comes from making purchases 
more convenient.  

Banks also stand to benefit because they will earn fees on low-value 
purchases that have always been done in cash. Plus, contactless smart 
cards might provide a competitive edge in a down market, according to 
Moore. "For payment providers, RFID is appearing at a time when 
spending is weak and competition is tight among issuers who are trying 
desperately to distinguish their card from the multitude on the market 
today," she says.  

The report includes details on pilot studies being done by major 
corporations, which show exactly how RFID payments systems are 
providing value to merchants and consumers. The competing types of 
RFID technologies are also explained, along with the drawbacks and 
benefits of each.  

Moore's report is available only to people who subscribe to Celent's 
services. The company declined to provide information on its 
subscription prices. -- By Lynn DeRocco   

RFID Journal

All Copyrights- are acknowledged. Material reproduced for  
educational and research purposes only.

                         -==-

Source: Raiders News Updates - http://www.raidersnewsupdate.com/


Cheers, Steve..

---