July 21, 2009
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News: Visa's Contactless Payment Attacked
Visa's contactless credit card program could soon feel that effects of a double whammy attack against it. The contactless card technology has experienced the overwhelming popularity that Visa had hoped for. The card which has a chip embedded in it that allows the consumer to wave or tape their card on a port to initiate payment transactions costs retailers more to process. Visa's recent increase in interchange fees for contactless credit card processing has caused some retailers to explore other traditional card processing systems. Speculation is that Visa is looking to recoup lost earnings from a consumer decrease in spending and new legislation aimed at curbing deceptive practices of credit card companies.
Best Buy, the nation's largest electronics retailer doing over $35 billion business, has offered the contactless credit card payment system to its customers since April 2008. The company recently released a statement saying they are looking into alternative ways to cut costs in the wake of the recent price increase in processing fees. To further jeopardize Visa's future in the contactless credit card business, Home Depot, a much larger retailer doing over $71 billion dollars, expects to roll out its new MasterCard contactless payment system. The scuttlebutt is that MasterCard has made it financially very advantage for Home Depot. So much so that the major home building supply retailer plans on installing the contactless card payment system in all of its 2200 plus stores without first testing the system.
The contactless credit card system has had a shaky start in the U.S. It has its benefits; however, many retailers have not been able to justify the cost of installing new equipment and higher interchange fees. Consumers have not embraced the convenience and find it just as easy to swipe the card as to tap it. With the future of Visa's contactless system weighing on the outcome of Best Buy's decision, MasterCard has greater odds that they'll continue to be the leader in the contactless payment system.