| Credit
card purchases in a blink | | |
| The bottom line is that credit
card companies will make more money as their customers spend more money.
Merchants involved in the pilot blink-card program
say their sales increased 20 percent to 30 percent when customers used the blink
cards, compared to cash. "The average person spending
$10 in cash at the pharmacy will spend around $10.75 because it's just faster
and easier," says Bucci. "People will pay less attention to how much
they spend. "Add in higher minimum
payment requirements and the impending bankruptcy law changes kicking in Oct.
17, 2005, and you will see many people in trouble if they don't watch themselves." Extension
of technology
Despite the cautionary tales of overspending, blink cards
may be just another extension of the technological highway. "This new card
is very exciting because it's been several decades since new credit card technology
has been introduced to the public," says O'Donnell. These
new cards are not without cost to the merchants, who will spend anywhere from
$150 to $200 to install each reader, but customers' time in the checkout line
will be reduced by 30 percent to 40 percent according to a Chase survey. That
means merchants can handle more customers, equaling more money.
A survey by MasterCard indicated the most-significant
time savings were recognized at drive-throughs, where MasterCard
PayPass shaved from 12 seconds to 18 seconds off the purchase time,
as compared to cash.
"Chase is
targeting businesses where small-money transactions usually take place and where
people tend not to spend much time, like fast-food restaurants, drug stores and
convenience stores," says Patrick Gauthier, senior vice president for Emerging
Products Development for Visa USA. "We think that the
adopting of new technology is very much a strategic plan for every business and
I'm sure we will see that play out," Gauthier says. "The new contactless
technology is bound to influence other credit card issuers if they choose to go
that route. Visa's infrastructure can enable an issuer to choose their type of
contactless credit card, anything from debit to prepaid cards, as well." O'Donnell
says that "pretty soon, everyone will have contactless credit cards and transactions
will move a lot faster for people." Bucci agrees, and
predicts that in the future only low-income people or people with bad credit will
use cash. Bucci says cash is "too difficult to tax, too expensive to process,
and too easy to loose." Although contactless cards
are the wave of the future, they will not completely take over the standard magnetic
strip. Oliver Steeley, vice president of Advanced Payment Solutions for MasterCard,
says, "Contactless credit cards won't take over swipe credit cards immediately
because the swipe is worldwide. It's a fallback, the minimum that every merchant
must have for use and purchase." | 
