The smart card manufacturer CardXX has begun a sampling programme of RFID-based key fobs for the retail point-of-sale transaction market, and is working with a number of platform solutions providers to produce the unique, branded and distinctive key fobs in various form factors for loyalty and prepaid programmes.

The key fobs being offered for testing purposes have been designed to provide retailers with branded “key chain shelf space” that provides contactless functionality for customer loyalty and gift programmes, in a bid to help them move away from the continuing battle for plastic card space in the consumer’s already-bulging wallet. This article is copyright 2005 TheWiseMarketer.com.

Consumer acceptance

Recent market trials by MasterCard, Visa and American Express have shown wide consumer acceptance of key fobs as payment devices for time sensitive purchases – for example the express payment queue at the supermarket or convenience store.

In practical terms, the key fob transmits the consumer’s payment information (for example, the details of a registered credit card, debit card, or store account card) to the POS terminal. The resultant speed and convenience of this payment method has generally resulted in consumers favouring the contactless payment device. Other contactless payment initiatives (for example, ExxonMobil’s Speedpass programme) have reported similar positive consumer reactions. For retailers, pilot schemes have reported increases in both the number of transactions and the total amount spent.

Battle for issuers

The value proposition for contactless payments increases as payment devices take on various shapes and sizes in multiple markets and product lines. Market researchers expect a battle to develop among issuers as they try to be the first to place their fobs on customers’ key chains as it becomes central to client acquisition strategies for retailers.

The idea does seem to be catching on with large retailers, in the USA at least: According to CardXX, McDonald’s plans to roll out MasterCard PayPass throughout North America during 2005, while the pharmacy store operator CVS plans to offer American Express’ ExpressPay system in most of its retail stores.

More Info:
http://www.cardxx.com