WHAT: Contactless Payment System



WHY: In 2005, for the first time, purchases by credit cards exceeded those by cash. More convenient yet are nascent card, badge, key fob, and cell-phone devices equipped with tiny RFID chips. Swiped or held near a reader, such “contactless payment systems” let users make purchases without opening—or even owning—a purse or wallet. Product registration or customization may likewise be tied to individual purchaser identity.



HOW: Current RFID technology can be embedded in any device larger than a pea. Enabled cards or phones send user information to similarly equipped kiosks, be they a vending machine, subway turnstile, or store checkout line. So completes the transaction—no contact necessary—and with greater security than more easily replicated magnetic strip credit cards. Last year, over 25 million consumers used chip-embedded credit cards to make contactless payments. By 2013, according to Javelin Strategy & Research, users will likely exceed 57 million, led by early-adopting fast-food restaurants, sports and concert stadium concessionaires, convenience stores, and gas stations.



CAVEATS: Security and privacy threats currently limit contactless purchases to $10 to $20.



QUOTE: James Van Dyke, Javelin Strategy & Research Founder and President: “Tap-and-go contactless payments will pave the way for cell phones and handheld computers to become ‘electronic wallets,’ packed with consumers’ payment and merchant cards, coupon offers, even medical records, family pictures and more.”



MORE INFORMATION: Javelin Research Dynamic Payments Reports

http://javelinstrategy.com/research/3