"In some instances it's faster than cash," said Betsy Foran-Owens, a MasterCard vice president. "You're eliminating the fumble factor."
MasterCard has been testing its PayPass system mainly in Orlando, Fla., and promises a nationwide rollout in 2004, beginning primarily at quick-service restaurants and other places where people tend to be in a hurry.
The new credit cards work much like the Speedpass system that ExxonMobil has accepted for quick payments at its gas stations since 1997. But the keychain fobs carried by Speedpass's 6 million users are good only at ExxonMobil stations and a handful of other retail outlets. In contrast, credit cards that incorporate the technology could be used anywhere regular plastic is accepted, as long as stores install the new readers.
The new cards have chips imbued with radio-frequency identification, the technology that Wal-Mart, the military, and other institutions hope to begin using soon to precisely track inventory. While old-fashioned credit cards store account information on a magnetic stripe that has to be swiped, the newer cards keep their data on chips inside the plastic.
The contactless cards have no battery or power. When they near a reader, they are jolted to life by the reader's electromagnetic waves. A small radio antenna in the cards instantly transmits account information to the reader. The transaction then proceeds through the credit card network just as if the card had been swiped.
In theory, the transaction could be intercepted without a consumer's knowledge by technologically savvy thieves intent on cloning a card. That's because the radio-frequency transmissions themselves are not encrypted.
The thieves, however, would have to get quite close to their targets or have a very sensitive reader. Also, the account number on the contactless cards cannot be used for online shopping.
