Consumers will use the contactless cards for making small purchases.
Visa USA on Thursday kicked off a system utilizing radio-frequency identification (RFID) technology to enable consumers to make purchases by waving cards with embedded chips in front of terminals. The system, under development for two years, is designed for "small-ticket" purchases at fast-food restaurants, movie theaters, and convenience stores.
The cards work at distances of 4 inches or less. Visa is guaranteeing merchants against "chargebacks," the risk of a payment being accidentally charged to the wrong credit or debit card, for purchases up to $25.
Visa has enhanced its VisaNet system to track contactless payment transactions through the authorization, clearing, and settlement processes, says Patrick Gauthier, Visa's senior VP of new product development. Card-issuing banks need to be able to recognize transactions as contactless when responding to customer queries. He declines to say whether any retailers have yet agreed to use the card.
MasterCard International has been testing a contactless card, called PayPass, at McDonald's restaurants in the United States. Sheetz Inc., a convenience-store chain, plans to deploy PayPass at all of its outlets beginning March 1. American Express' ExpressPay is being rolled out at CVS pharmacies.
Unlike MasterCard and American Express, Visa has chosen not to give its contactless card a name. Instead, a special logo will appear above the standard Visa logo identifying the cards as contactless-ready.
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