American Express extends RFID payments

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By: Wise Marketer Staff |

Posted on July 22, 2003

American Express extends RFID payments

The pilot of the 'ExpressPay' RFID (radio frequency identification) payment technology from American Express has been extended to 175 retail locations in the greater Phoenix (Arizona) area, following successful American Express employee-based trials in the area.

The ExpressPay payment mechanism, which the company began piloting in summer 2002, is a simple key fob, powered by contactless RFID chip technology, offering a quick and convenient way for consumers to pay for everyday purchases.

The 175 merchant locations now accepting the new payment method include all Carl's Jr. locations, and participating Dairy Queen, Kwik Kopy Printing, Quiznos Subs and Schlotzsky's Deli locations.

Early adopters of the technology are expected to be merchant locations where speed of payment is important, such as fast food restaurants, supermarkets, drug stores, gas stations, and corporate cafeterias.

Since the launch of the ExpressPay pilot, results show that participating merchants have seen customer spending increase by 20% - 30% compared to their cash spending, while customers have seen their checkout time reduced by 30% - 40% overall.

Rapid service To make payment, customers simply hold the key fob next to an RFID reader at the checkout. The payment is then authorised within a few seconds, and no signature is required. ExpressPay links directly to any existing credit, charge, or debit card to fund the purchase.

"ExpressPay allows consumers and merchants to benefit from added speed and convenience," said David Bonalle, general manager of advanced payments for American Express. "We have found in testing that consumers prefer using their ExpressPay key fob rather than fumbling for their wallets, and merchants enjoy the benefits of their customers' increased spending and reduced time at the checkout."

Funding options Consumers have the option of funding their ExpressPay transactions in one of two ways: Directly linked to an American Express card, or as a pre-paid product linked to any major credit, charge, or debit card.

The ExpressPay Direct Link option carries a daily spending limit of US$150, and records each transaction directly on the cardmember's monthly statement. Customers making purchases linked to their American Express card will also receive the rewards and loyalty benefits associated with the card.

The ExpressPay Pre-Loaded option can be pre-paid up to US$600 monthly, and can be automatically reloaded from the same payment source when the balance falls below US$20. Interestingly, American Express says that customers will not be held liable for any fraudulent ExpressPay charges detected.

The technology American Express developed ExpressPay in conjunction with Texas Instruments RFID Systems. The key fob and RFID reader were designed with an open architecture that is compatible with RFID industry standards (ISO/IEC Standard 14443).

The key fob includes a number of security features, including data encryption. The reader can be implemented at merchant locations easily, as it works with existing point-of-sale systems and is free-of-charge to merchants during the pilot programme. Transaction charges are authorised and processed through the merchant's existing credit and charge card payment network.

Pilot background The Phoenix rollout of ExpressPay extends the pilot the company began a year ago, when it introduced the contactless key fob to several hundred employees for use at its corporate cafeteria, and at a handful of merchants in the area.

In the last quarter of 2002, ExpressPay was market tested with non-American Express employees in New Jersey, at a corporate cafeteria serving multiple tenants and, separately, for making purchases at a local New Jersey fitness centre.

And, early in 2003, the company introduced ExpressPay to the cafeteria serving a major financial institution and at American Express' headquarters cafeteria and convenience store, all in New York.

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