Smart cards and RFID will benefit retail loyalty

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By: Wise Marketer Staff |

Posted on March 5, 2003

Smart cards and RFID will benefit retail loyalty

Applying smart card technology to protect the identity and privacy of consumers in retail loyalty programmes and other applications presents an excellent market opportunity, according to speakers at the Smart Card Alliance's recently concluded mid-winter conference.

While not everyone has settled on a single direction, all agreed that the future is bright for smart cards, with major industry sectors such as financial, retail and loyalty, health care, and transportation now looking for solutions to the problems of privacy, identity verification and transaction integrity.

At the conference, speakers from enterprise IT, financial and retail, health care, and government sectors explored the mounting pressures to update the ways in which identities are created, recognised, delivered and protected.

"A smart card can be a personal, portable database, giving individuals control over their personal information," explained Smart Card Alliance executive director, Randy Vanderhoof. "The strong security provides a kind of 'personal firewall' that protects cardholder privacy by limiting information access based on the specific situation."

Retail applications Financial and Retail speakers at the conference discussed retail perspectives on identifying consumers, and on new technologies that are expected to make inroads at physical stores.

Jim Crawford, a retail analyst for Forrester Research, made the subtle point that consumers often don't care about privacy itself, being worried instead about the abuse of their privacy.

To reinforce this assertion, he highlighted how readily airline passengers will trade identity information for security, or online shoppers will trade their identity for added value in the form of coupons or free downloads.

He also noted that 85% of primary grocery shoppers would be happy to use their loyalty card to get personalised promotions as they enter a grocery store.

RFID developments Building on a holistic view of consumer attitudes, payment trends and retailing, Crawford predicted: "A new concept of financial identification will emerge in which payment devices will be used for identification when you enter the store, as well as for payment when you leave." His prediction made particular reference to radio frequency identification (RFID) payment solutions, adding, "RFID is a revolution in the making."

Citing the planned roll-out of ExxonMobil's Speedpass technology in the US-based Stop & Shop grocery chain, and the enthusiasm surrounding the introduction of MasterCard's PayPass, Crawford asserted that RFID is the logical evolution of smart card technology.

He also predicts that biometrics will be the evolution of PIN codes because - when tied to a card - it enables payment providers to confirm that the card bearer is who they claim to be.

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