Contactless Payment Solutions

January 2004 issue of Transaction World

A personal favorite of many consumers comes with the speed and convenience of contactless payment solutions. ViVOtech's new offering provides the ability to use a credit card at a fast-food restaurant, in the drive through lane! Long customer queues at a Quick Service Restaurant (QSR) counter and drive through lanes can be challenging for the QSR as well as the customer alike. A QSR aims to provide a delightful payment experience that minimizes queues and is fast and convenient for its customer as well as allows it to make more revenue.

To address these real-life issues, ViVOtech recently launched an end-to- end solution for the QSR industry. ViVOtech's customized solution called ViVOpay QSR allows QSR operators to speed up customer lines by enabling contactless payments that are faster than cash and safer than checks. QSRs can now accept the recently introduced contactless payment programs by leading card companies as well as QSR branded gift and loyalty programs to enhance customer loyalty.

ViVOtech's end-to-end solution delivers operational savings and additional revenues for restaurants. The ViVOplatformTM software combined with support services provide the requisite ability for card activation, card acceptance, reloading, balance inquiry, instant discounts and online customer service. The customer-facing ViVOpayTM countertop and ViVOpay Drive-ThruTM connect seamlessly with the existing POS systems and requires little investment. Finally, ViVOtech's customizable ViVOcardTM contactless payment device allows gift and loyalty cards to have custom form factors as cards, key fobs, cell phones and so on, better expressing the company's branding and customer's lifestyle. This new functionality enables QSRs to differentiate them from competition and create more mind share for their branded products.

With the market trend of ISOs providing value added services to their clientele, ViVOtech works with ISOs so that the latter can provide a complete point-of-sale and end-to-end payment contactless payment solution to the ISO's customers. A key element of the new solution includes, ViVOpay DT(tm), a contactless reader that interfaces with POS systems enabling contactless payments, gift card payments, and loyalty programs using existing cash register systems. This industry first product allows QSR restaurants to implement programs that have e-coupons and gift cards from the countertop to the drive thru lane. ViVOtech's ViVOpay Drive Through (DT) product is a weatherized contactless payment reader that collects information securely. Customers simply wave the contactless credit card or contactless gift card in front of the ViVOpay 3000(tm) countertop reader or the ViVOpay DT reader to make a secure, contactless payment. Dynamic loyalty programs can also be implemented utilizing the same gift card or with separate loyalty cards. The ViVOpay DT is a plug-and-play device that can be installed at most existing cash register systems without changes to the existing functionality. Its flexible design allows for mounting to walls, metal, poles, or areas conveniently located near the drive thru payment window.

ViVOtech has sold this solution to an ISO called GM Merchant Solutions who has further done business with a franchise of a large QSR chain in San Diego.

Also responding to the demand for speed and convenience is MasterCard with their new PayPass program. PayPass is a new "contactless" payment program that provides consumers with a simpler way to pay. Using MasterCard PayPass, consumers simply tap or wave their payment card or alternative form factor on a specially equipped merchant terminal that then transmits payment details wirelessly, eliminating the need to swipe a card through a reader. The new solution is ideal for traditional cash-only environments where speed is essential, such as quick-serve restaurants, gas stations and movie theaters.

MasterCard first launched PayPass to its global headquarters employees, in Purchase, New York, on both credit and debit cards. Following that technology trial, MasterCard introduced PayPass to consumers in an initial public trial in Orlando with Chase, Citibank and MBNA. More than 16,000 cardholders and more than 60 retailer locations participated.

The objectives of the Orlando trial were to test the real-world application of MasterCard's choice for contactless payments. Specifically, MasterCard wanted to better understand the actual cardholder and retailer experience. These objectives were met successfully. Cardholders in Orlando reported that MasterCard PayPass is simple, quick and convenient and even fun. Cardholders indicated a desire for acceptance chain-wide across multiple retailers. They would like to use MasterCard PayPass at quick service restaurants, gas stations, grocery stores, convenience stores, discount retailers, video stores and airports.

MasterCard PayPass trial results show an effect on how consumers used their cards. For example, MasterCard PayPass prompted infrequent card users to pay with their PayPass enhanced cards much more frequently and in a variety of situations. Over the nine month Orlando trial, MasterCard realized an 18% activation rate on formerly inactive accounts, and those newly active accounts transacted more than 8 times per month in September. MasterCard also saw a "top of wallet" trend emerge among PayPass cardholders. Specifically, there was an almost 23% increase in transaction volume versus account spend during the same period in 2002, and an even greater increase, of nearly 28%, in total weekly spend versus 2002. Month over month, the trials demonstrated more than a 12% increase in transaction volumes at PayPass merchants. MasterCard PayPass reduced purchase times at participating retailer locations. The most significant time savings were recognized at drive-thrus where MasterCard PayPass shaved between 12 - 18 seconds from the purchase time, as compared to cash.

In addition to the PayPass trial in Orlando, MasterCard worked with Nokia to incorporate MasterCard PayPass into mobile phones in a trial in Dallas, Texas. The primary objective of this trial was to explore non-card MasterCard PayPass payments. Overall, consumer and retailer reactions were similar to Orlando and were positive. One finding showed that the average MasterCard PayPass phone payment averaged six seconds faster than card-based transactions. This reduction is due largely to the elimination of the "fumble factor" - the time taken to get a card out of a wallet or purse to pay. MasterCard will continue to introduce additional contactless payment related innovations, delivering to financial institutions, retailers and consumers "The Simpler Way to Pay." PayPass usage continues to expand in Orlando and MasterCard is also proceeding with plans for MasterCard PayPass deployments in additional locations.