A new suite of RFID-based contactless payment systems has been launched by transaction management systems provider Accelitec Inc., with the aim of providing consumers with fast, secure and convenient payments while offering merchants a platform for other applications, such as loyalty programmes.
Accelitec's new PayPilot offering includes an automated clearing house, credit transaction facilities and pre-pay facilities. According to Accelitec's CEO, Tom Bartz, "Retailer demand for an alternative to traditional debit and credit card payment systems is at an all time high. We've been working with major retailers on a contactless payment system for the past two years, and started deploying prototype systems in 2004. PayPilot was designed to put the retailer in control of payment methods, and is now ready for commercial deployment."
Driving forces
The company has found that two specific forces are driving adoption of new payment technologies:
- Consumer preferences
First, there is the consumer's growing preference for electronic payments and increasing resistance from merchants to rising transaction fees. Accelitec notes that nearly half of US consumers carry less than US$20 in cash, relying instead on credit, debit and other electronic payment methods.
- Interchange rates
Second, there are rising interchange rates charged by major credit card associations - over US$17 billion in 2004, according to a recent lawsuit from the nation's leading retailers. These rising charges are particularly detrimental in low-margin retail operations (such as grocery stores).
Bartz warns that, as consumers increasingly use credit and debit cards as replacements for cash and checks, and as interchange fees continue to rise, transaction costs will become a much more significant burden to retailers.
How PayPilot works
The system integrates into the merchants' POS systems, enabling them to take contactless payments (and therefore reduce transaction fees), roll out loyalty programmes, and manage the transaction process more efficiently.
Consumers sign up for the programme using a PayPilot kiosk at their local retail outlet. When they've registered, the kiosk dispenses either a key fob or plastic card RFID transponder.
The key fob or card is then presented to the PayPilot RFID reader terminal at the check-out, and the system's authentication processes, security checks and other consumer-preset variables provide the necessary spending controls.
Software platform
The transaction management system itself comprises three hardware components and some back-end and transaction software. The PayPilot network operates on the Microsoft .NET software platform, allowing system changes and upgrades to be made in real-time without system interruption or down-time.
According to Bartz, the system is ideally suited to higher-volume retail environments because these operations are the most seriously impacted by increasing transaction fees and limited customer transaction times (examples being supermarket chains, fuel retailers, and quick-serve restaurants).
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