Chicken or egg ? the curious case of contactless credit-cards – Visa’s PayWave and Mastercard’s PayPass

The NAB's Contactless credit-card reader

Which comes first – customers with contactless credit-cards? Or merchants with EFTPOS terminals that can read the cards?
Its an obvious question to ask following VISA’s announcement last week that 500 NAB merchant (i.e. business) customers in Melbourne will soon be given contactless credit-card readers to connect to their EFTPOS terminals.
“Contactless transactions allow customers to simply hold their cards in front of a card reader to pay for purchases up to $100, without either a signature or a PIN,” said Steve Aliferis, the NAB’s general manager for working capital solutions.
“For merchants, the transactions can be up to three times faster than paying with cash, which means they can serve customers quicker and reduce queuing” he said.
Mr Aliferis told the Australian IT that Melbourne’s well-known Pancake Parlour and a number of other other fast food outlets and cafes had signed-up for the program.
And Visa internal research was said to show that whereas the average speed of service by common debit or credit cards is 25-35 seconds, and cash takes 12-14seconds, contactless payments take a maximum of only 6sec.
Visa Australia general manager Chris Clark said contactless payments used the same, secure links as existing card security and that cards can be read within 5cm of the reader.
That’s all very well. And no doubt very true.
But the curious fact is that NAB customers don’t have any VISA Paywave contactless cards in their wallets. The NAB doesn’t issue them.
Nor does Westpac.
And the ANZ has only a few selected staff using them for a small scale trial at its new Dockland headquarters in Melbourne.
Only the Commonwealth Bank issues contactless cards – Mastercard branded PayPass cards.
Indeed, since 2007 virtually all CBA issued Mastercards have had a PayPass chip embedded.
So the NAB is giving its merchants equipment that can only be used to read cards issued by a rival bank.
Of course, in the topsy turvy and hypocritical world of Australian banking, the NAB isn’t alone in promoting what it doesn’t do itself.
Because whilst the CBA has issued more than a million PayPass equipped cards, CBA merchants’ EFTPOS terminals can’t read them.
That may be about to change nevertheless. A CBA official bank spokesman told eCommerce Report earlier this week that the bank has “just started” marketing the readers to their EFTPOS merchants.
“The Commonwealth Bank does have “EFTPOS terminals” that accept these card types. They are “Ingenico 5110”s with a Vivotech contactless card reader. The Bank has just commenced marketing these devices and we are in the process of undertaking a rollout in the coming months. The devices accept both MasterCard Paypass and Visa Paywave contactless cards.”
The NAB’s contactless card-readers are also able to read both the MasterCard and Visa contactless card technologies.
But according to the bank’s web-site only the NAB’s top of line Eclipse EFTPOS terminals sourced from SAGEM will be able to connect to the readers.
Even so, the NAB promised that, at least initially, its merchants won’t have to pay extra for the readers.
“To help promote contactless acceptance during this initial roll out phase, for the forseeable future we are providing the readers to our customers without additional terminal or reader rental changes. We will continue to reassess this position throughout 2010.
Transaction fees still apply in the same way to how credit transactions are charged today. There are no additional transaction fees for contactless transactions. Contactless is just another card payment method – cardholders can now choose to swipe, dip or wave.”
Of course, it isn’t just the credit-card company’s and big four banks that have ‘skin’ in the contactless card game here in Australia.
The Woolworths ‘Everyday Money’ Mastercard credit-card issued by HSBC has a contactless chip embedded.
And the card can be used to pay for petrol by just waving and keying in a PIN at the so-called ePumps on the concourse of Woolies/Safeways petrol stations.
But, as eCommerce Report readers will recall from our reports at the time, the ePumps can’t read Mastercard PayPass or, indeed, Visa PayWave chips.
Indeed the Australian Competition and Consumer Commission (ACCC), despite initial reservations and opposition from the big four banks, eventually granted Woolies official dispensation for its ePumps to lock-out the others cards.

For more information go to
www.visa.com/paywave
http://www.mastercard.com/us/personal/en/aboutourcards/paypass/index.html
http://www.nab.com.au/wps/wcm/connect/nab/nab/home/business_solutions/1/3/1/4/2
https://www.everydaymoney.com.au/wps/portal/money/aboutthecard/epump
http://www.ecommercereport.com.au/story90.php
http://www.ecommercereport.com.au/story69.php