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JCB and MasterCard agree on contactless payment protocol
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CONTACTLESS PAYMENT
JCB and MasterCard agree on contactless payment protocol Asian international credit card brand, JCB, has reached an agreement to adopt MasterCard's contactless payments communications protocol. Visa International already announced its support for the protocol in March last year. Having a common communication protocol ensures global interoperability for contactless payment products, a development which should help accelerate the deployment of contactless terminals. In particular, the common communications protocol is advantageous because it will allow point-of-sale (POS) terminal vendors to reduce the amount of system development that might have been required. It will also reduce initial costs and lead time for most financial institutions and merchants because they do
not have to purchase multiple POS terminals to support different contactless card products. The protocol is based on MasterCard's PayPass ISO/IEC 14443 Implementation Specification, for standardized contactless payment services. According to Akihiko Shigemori, senior vice president, advanced technologies, JCB Co., "With this arrangement, JCB can accelerate the expansion of its contactless payment field in international markets, while continuing to boost the QUICPay product in Japan, which is based on FeliCa technology." JCB rolled out QUICPay in Japan in April 2005, a scheme supported by Sony`s FeliCa chip specification, which is widely employed for contactless payment solutions such as public transportation fare systems and mobile phone applications. In recognition of the growing demand for globally standardized contactless payment services around the world, JCB says it has plans to begin
development of an international JCB brand contactless solution based on the common communication protocol later this year. In a separate announcement, JCB revealed that Transcard, Bulgaria's largest credit card issuer and acquirer, will roll out the JCB-branded cards this March. The deal marks the first time a JCB card compliant with EMV has been issued in Europe, and will bring the number of countries in which JCB cards are issued to 20. Transcard was the first to issue credit cards in Bulgaria in 2002 and according to JCB it there is significant potential for expansion, as only 3% of payment transactions are made by credit card. The newly issued TRANSCARD JCB card is Bulgaria's first international credit card in compliance with EMV and Transcard anticipates issuing 30,000 of the new cards in the first year alone. Contact: Kazumi Kinoshita at JCB Co., Tel:+81 3 5778 8371, Email: [email protected]
VIEWPOINT Biometric technology at the check-out… Just when UK retailers and shoppers have settled down to using Chip and Pin, three stores in the Co-operative movement have launched a test of fingerprint scanning technology from California’s Pay by Touch as an alternative to card and cash payments. The system scans fingerprints at the point-of-sale and links the image with an electronic wallet which holds financial and loyalty data. This eliminates the need to carry cards, cash or a cheque book. John Rogers, chairman and CEO of Pay By Touch, claims that over 2.3 million shoppers in the US are already using the system, which is available at over 2000 retail locations. The UK banks have so far rejected the use of fingerprints for authentication because they believe that the technology tends to reject too many legitimate customers. Retailers I spoke to in a straw poll shrugged their shoulders at the news. The need to install another terminal at the till was not considered to be a major issue. “If the banks will accept liability, then we are quite happy,” was a typical response. “If it brings transaction costs down, then we actually welcome it.” This brings us to the heart of the matter. The new system would in effect be built around a mandate allowing retailers to make a direct debit from the customer’s bank account; it would use the BACS system which does offer cheaper transaction costs than the major cardbased schemes.
…but has it missed the boat? But will biometric point-of-sale technology catch on in the UK? The odds are stacked against it. The problem is that the technology has probably missed the boat. In the US, Visa and MasterCard are now rolling out large-scale contactless card schemes. Visa, for instance, says that its contactless card is now accepted in 20,000 merchant locations. Chase Manhattan has now rolled out six million contactless cards. Citibank is to trial MasterCard’s PayPass at barriers on the New York subway, following the success elsewhere of mass transit contactless
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cards. And MasterCard is running a pilot scheme with Royal Bank of Scotland to test a contactless debit card which could be used Europe-wide for payments below 15.
***
Changing patterns of fraud The benefits of Chip and Pin in the UK are beginning to be felt. Although online banking and Card Not Present fraud are on the increase, total card fraud losses fell to £439.4m in 2005, compared with £504.8m in 2004. This is the first fall in overall card fraud since 1995. The other side of the coin is that direct fraud losses from online phishing scams in the UK almost doubled in 2005 to £23.2m. Rising phishing fraud losses are prompting some banks in the UK to roll out extra security to customers – and about time too, say the customers. Alliance and Leicester is to introduce a form of twofactor authentication across all of its Internet accounts. And Lloyds TSB has conducted trials of a Vasco two-factor authentication device which it says was a success. But the UK banks as a whole seem very little closer to introducing industry-standard authentication devices for their customers.
***
The tide turns for branches
When the banks told us ten (or was it twenty?) years ago that the branch was doomed I really believed that ATMs and the Internet had brought about permanent change. How naïve I was. UK banking group HBOS has just announced that it is to open 100 new Halifax branches over the course of the next five years in a move that will create 1500 new jobs. This is the largest expansion of the Halifax network since the 1970s and will see a new branch opening approximately every fortnight for the next five years. Andy Hornby, chief executive designate, says: “Branches are at the heart of retail banking. We need more branches in the South of England and now we will have them. The right branch coverage really helps us to deliver our market share targets.”
David Jones David Jones’ book on Roman banking, The Bankers of Puteoli, has just been published by Tempus, at £19.99.
Card Technology Today March 2006
CONTACTLESS PAYMENT
JCB and MasterCard agree on contactless payment protocol Asian international credit card brand, JCB, has reached an agreement to adopt MasterCard's contactless payments communications protocol. Visa International already announced its support for the protocol in March last year. Having a common communication protocol ensures global interoperability for contactless payment products, a development which should help accelerate the deployment of contactless terminals. In particular, the common communications protocol is advantageous because it will allow point-of-sale (POS) terminal vendors to reduce the amount of system development that might have been required. It will also reduce initial costs and lead time for most financial institutions and merchants because they do
not have to purchase multiple POS terminals to support different contactless card products. The protocol is based on MasterCard's PayPass ISO/IEC 14443 Implementation Specification, for standardized contactless payment services. According to Akihiko Shigemori, senior vice president, advanced technologies, JCB Co., "With this arrangement, JCB can accelerate the expansion of its contactless payment field in international markets, while continuing to boost the QUICPay product in Japan, which is based on FeliCa technology." JCB rolled out QUICPay in Japan in April 2005, a scheme supported by Sony`s FeliCa chip specification, which is widely employed for contactless payment solutions such as public transportation fare systems and mobile phone applications. In recognition of the growing demand for globally standardized contactless payment services around the world, JCB says it has plans to begin
development of an international JCB brand contactless solution based on the common communication protocol later this year. In a separate announcement, JCB revealed that Transcard, Bulgaria's largest credit card issuer and acquirer, will roll out the JCB-branded cards this March. The deal marks the first time a JCB card compliant with EMV has been issued in Europe, and will bring the number of countries in which JCB cards are issued to 20. Transcard was the first to issue credit cards in Bulgaria in 2002 and according to JCB it there is significant potential for expansion, as only 3% of payment transactions are made by credit card. The newly issued TRANSCARD JCB card is Bulgaria's first international credit card in compliance with EMV and Transcard anticipates issuing 30,000 of the new cards in the first year alone. Contact: Kazumi Kinoshita at JCB Co., Tel:+81 3 5778 8371, Email: [email protected]
VIEWPOINT Biometric technology at the check-out… Just when UK retailers and shoppers have settled down to using Chip and Pin, three stores in the Co-operative movement have launched a test of fingerprint scanning technology from California’s Pay by Touch as an alternative to card and cash payments. The system scans fingerprints at the point-of-sale and links the image with an electronic wallet which holds financial and loyalty data. This eliminates the need to carry cards, cash or a cheque book. John Rogers, chairman and CEO of Pay By Touch, claims that over 2.3 million shoppers in the US are already using the system, which is available at over 2000 retail locations. The UK banks have so far rejected the use of fingerprints for authentication because they believe that the technology tends to reject too many legitimate customers. Retailers I spoke to in a straw poll shrugged their shoulders at the news. The need to install another terminal at the till was not considered to be a major issue. “If the banks will accept liability, then we are quite happy,” was a typical response. “If it brings transaction costs down, then we actually welcome it.” This brings us to the heart of the matter. The new system would in effect be built around a mandate allowing retailers to make a direct debit from the customer’s bank account; it would use the BACS system which does offer cheaper transaction costs than the major cardbased schemes.
…but has it missed the boat? But will biometric point-of-sale technology catch on in the UK? The odds are stacked against it. The problem is that the technology has probably missed the boat. In the US, Visa and MasterCard are now rolling out large-scale contactless card schemes. Visa, for instance, says that its contactless card is now accepted in 20,000 merchant locations. Chase Manhattan has now rolled out six million contactless cards. Citibank is to trial MasterCard’s PayPass at barriers on the New York subway, following the success elsewhere of mass transit contactless
16
cards. And MasterCard is running a pilot scheme with Royal Bank of Scotland to test a contactless debit card which could be used Europe-wide for payments below 15.
***
Changing patterns of fraud The benefits of Chip and Pin in the UK are beginning to be felt. Although online banking and Card Not Present fraud are on the increase, total card fraud losses fell to £439.4m in 2005, compared with £504.8m in 2004. This is the first fall in overall card fraud since 1995. The other side of the coin is that direct fraud losses from online phishing scams in the UK almost doubled in 2005 to £23.2m. Rising phishing fraud losses are prompting some banks in the UK to roll out extra security to customers – and about time too, say the customers. Alliance and Leicester is to introduce a form of twofactor authentication across all of its Internet accounts. And Lloyds TSB has conducted trials of a Vasco two-factor authentication device which it says was a success. But the UK banks as a whole seem very little closer to introducing industry-standard authentication devices for their customers.
***
The tide turns for branches
When the banks told us ten (or was it twenty?) years ago that the branch was doomed I really believed that ATMs and the Internet had brought about permanent change. How naïve I was. UK banking group HBOS has just announced that it is to open 100 new Halifax branches over the course of the next five years in a move that will create 1500 new jobs. This is the largest expansion of the Halifax network since the 1970s and will see a new branch opening approximately every fortnight for the next five years. Andy Hornby, chief executive designate, says: “Branches are at the heart of retail banking. We need more branches in the South of England and now we will have them. The right branch coverage really helps us to deliver our market share targets.”
David Jones David Jones’ book on Roman banking, The Bankers of Puteoli, has just been published by Tempus, at £19.99.
Card Technology Today March 2006