mia

Magnetic strips and contact chips limit the form factor of the payment media to a card which will fit Ito the reader. Contactless chips allow the consumer to choose a card, a fob, a phone, a pen, a wristwatch, a pedant, anything.

This can enhance security. Today a pickpocket knows that my wallet is valuable, but in another decade it could be one of my cuff links.

jamar

Also, the ability to fit multiple cards in one medium. For example, while visiting Japan, my phone has three different contactless cards stored in it.

OverThereTooMuch

I believe this is one of the main concerns of contactless cards right now. People are worried that crooks can just walk near them in a crowded subway car and steal their info without their knowledge. There are many RFID-blocking wallets being sold for just this reason. (People have similar concerns about US passports)

Putting it in something like a key fob, which maybe requires the user to press a button to "activate" it, would seem like an easy way to address that concern.

cbn42

That is a good point, but I doubt it's much of a consideration. People know that they have zero liability for unauthorized transactions anyway, so it isn't much of a concern. Merchants are also not likely to upgrade for this reason unless forced to.

I have seen plenty of ads for Paypass, Paywave, Blink, Google Wallet, and whatever other contactless payment systems various entities have come out with recently. I have never seen a person actually use a contactless payment in the US, ever. My guess is that this is going to go the way of the laser disc, and the EMV chips will become common. But it will be fun to follow over the next few years.

Vasco

In Canada, where EMV is now the norm, the deployment of PayPass and PayWave (and Amex's ExpressPay and Interac's Flash) has been slow, but consistent over the last few years. I have great success using contactless at self-serve gas pumps, coffee shops, grocery stores and other similar spots. To be honest, an EMV transaction takes longer to complete than the old signature transaction, so when I'm faced with the option of a contactless terminal there is no question I'm just going to tap my wallet rather than go through the whole Chip & PIN process.

My point is that, in my own experience in Canada, the introduction of EMV has actually increased the popularity of contactless.

kebosabi

I never really understood the fascination of why anyone would want a contactless feature on their phone. Before it was only worrying about pickpockets stealing my wallet, but now if I have my smartphone stolen that would mean the crook essentially getting all of my contacts (for verificiation purposes, what's your zip code? hmm...let's just look up that in this stolen smartphone's contact info) and e-mails along with my credit card number from just stealing a phone. Somehow I just don't see why the banks think this will take off.

That being said, I'm much more comfortable with the contactless feature directly built in to the card itself.

mia

I believe banks see phone or fob contactless only as a convenience for small transactions of the type where already we do not sign or enter a zipcode. In other words these supplement, but do not replace, the plastic card.

kebosabi

I understand it for smaller transactions, but somehow I don't see why banks would want to spend the extra money in making these key fobs or cell phone stickers instead of just incorporating it into the card itself. Even AMEX dropped their ExpressPay keychain fob idea after lukewarm results and decided to concentrate on putting them into the cards itself:

http://blogs.creditcards.com/2008/03...ctless-fob.php

mia

1. They want to make it so easy to pay through their accounts that you won't consider using currency.

2. They recognize that non-financial companies (e.g. PayPal) created new payment networks from nothing, and that other non-financial companies (e.g. Google, Amazon, cellular networks) could do the same if they opt out.

jamar

The funny thing is that I have a Wells Fargo card with contactless. I've seen more places to use it in Canada than I have in the US.

D582

Contactless and EMV are not mutually exclusive. There are actually 2 versions of PayPass/PayWave. There is a 'Mag Stripe' version which basically just transmits the data from the magnetic stripe. This is what you have in the US. Then there is a 'EMV' version which does a full EMV encrypted transaction via the contactless interface. This is primarily what is in Canada and other EMV countries.

jamar

There's also Visa Touch in Japan, which is incompatible with either kind of PayWave because the underlying technology is different (Thank you Visa ).

Also, does that mean that in the future, magstripe/PayWave-only cards will be incompatible with EMV/PayWave terminals?

kebosabi

Actually there is a perfectly good reason why VISA used VISA Touch in Japan; VISA Touch is based upon Sony's FeliCa standard which is more common throughout Asia.

That being said, the POS terminals that merchants were using throughout Japan, Hong Kong, Singapore and others were already capable of handling Felica based contactless payments from high usage of mass transit Felica based contactless cards like Suica/PASMO, Octopus, and EZ Link cards. Hence, it didn't make sense for VISA in Asia to push PayWave when merchants in Asia where Felica based card readers were more prevalent.


To summarize:

VISA PayWave is based upon the MIFARE contactless standard which was built by Philips. The MIFARE contactless standard is more common in Europe and North America.

VISA Touch is based upon the FeliCa contactless standard which was built by Sony. FeliCa contactless standard is more common in Asia.

As with any other competing sets of similar technology (VHS vs Beta if you're old enough to remember that ), each has its pros and cons.


Will those two remain incompatible? No, don't worry.

NFC (2nd generation contactless technology) builds upon and combines both aspects of MIFARE and Felica standards so eventually both will become compatible with another as NFC starts to roll out.


The latest version of EMV also incorporates NFC capability. Hence EMV 2.0 so to speak, incorporates NFC capabilities, which in turn combines both MIFARE and Felica contactless standards, allowing for VISA PayWave and VISA Touch to be compatible with one another.

jamar

Odd. I've been told that the two will not be compatible when it comes to payments, which is the part that matters, due to authentication differences. For example, Google Wallet will not work on my FeliCa-enabled Android phone. I hope you're right, though, and that what I'm seeing is just some implementation issues.

(and if that was the case, then why didn't Visa also go with Visa Touch in Hong Kong and Singapore as well as Japan? I think both of those places use PayWave).

kebosabi

Google Wallet is a software that supports NFC, your Japanese Android phone hardware only supports Felica. This is a like trying to pop in a Blu-ray disc (software) into a old DVD player (hardware); the old DVD player is not going to read the newer Blu-ray disc. Put it another way, it's like trying to play a PS3 game on an old PS2 console; it's not going to work.

What you need is an Android phone that supports NFC. When that comes out then stuff like adding your Suica/PASMO card (Felica), Oyster Card (MIFARE) as well as Google Wallet (NFC) becomes possible. This is akin to Blu-ray players (hardware) having backward compatibility to play DVDs, VCDs, SACDs, and CDs (softwares). Using the PS analogy, the PS3 can handle PS1 & PS2 games as well as PS3 games.