Contactless Cards--Just a Phase?

By Maria Bruno-Britz, Bank Systems & Technology

Maybe the title of that should really read: Contactless Cards--Just a Step in the Evolutionary Ladder? Countless emails have flooded my inbox containing news about banks that have implemented contactless card technology for its customers in some form or another. The technology in itself is quite simple: take a traditional-looking plastic card or even some kind of key fob device, wave it in front of a reader, and your payment is done. But is that really a new payment device or just another way to use an old technology--cards? Some experts I've spoken with think the latter. In fact, some even felt this was just a transitional technology that will soon go by the wayside in favor of something even more radical--mobile phones. That is mobile phones as contactless payment devices. The mobile wallet concept has been bandied about for the last decade but hasn't really come to fruition, at least in the US. The story is a little different in countries like Japan. But many feel we're on the threshold in the evolution of electronic payments in this country and that mobile will be the next new device. People's wallets would become significantly thinner as their plastic cards disappear, replaced by their more convenient cell phones. They would simply wave their phones in front of readers at the point of sale and go their merry ways. Of course, as with anything in payments, this evolution will take cooperation from many players before it occurs. Convincing retailers to shell out the cash to upgrade their payments infrastructure will be just one obstacle standing in the way of contactless mobile payments. But some day, I am assured, this will happen. And banks better be sure to make themselves the key players in the mobile payments game. According to one expert I spoke with, FIs should at least begin looking at this technology now before being left playing catch up.