MasterCard hands touch-and-go challenge to retailers

MasterCard has unveiled an ambitious plan to make contactless payment technology a standard feature by 2012, with retailers who begin trading in the next two years required to install the tap-and-go technology immediately.

Mastercard says the PayPass tap-and-go system will become a standard feature on new Mastercard credit and debit cards in October 2012.

Merchants who begin trading within the next two years will be required to install the PayPass system immediately, while existing businesses will have three years.

The merchant categories required to accept the technology include taxis, newsagents, bookstores, supermarkets, convenience stores, grocers, pharmacies, service stations, parking lots, fast food restaurants, cafés, bars, cinemas and theatres.

The launch of the campaign indicates competition is heating up between MasterCard and Visa, and Eftpos Payments Australia or EPAL, which runs the EFTPOS system.

The announcement comes just three weeks after EPAL revised the pricing structure for processing EFTPOS transactions in a bid to fortify the system against the onslaught of MasterCard and Visa debit cards.

EPAL’s new sliding scale of fees states that for every transaction below $15, the interchange fee will be set at zero cents.

For every transaction above $15, a fee has been set at five cents. This compares to the current fee of 12 cents for transactions made on the Visa and MasterCard networks through debit cards.

Eddie Grobler, divisional president of MasterCard Australasia, says PayPass is the future of payments.

“PayPass is a fast, convenient and safe way to pay for purchases of less than $100 and involves a simple tap of a card against a contactless reader, making it ideal for use when customers would generally use cash,” Grobler says.

“We know that customers want PayPass. Between June and December 2010, we saw growth in the number of PayPass transactions in Australia of over 235%.”

There are more than 35,000 business locations already using the system including McDonalds, 7-Eleven and JB Hi-Fi.

In addition to encouraging contactless payment technology, MasterCard says it plans to add a cash-out facility to its debt cards – an option currently only offered by EFTPOS – and migrate all transactions to microchip from the less secure magnetic strip.

The main components of MasterCard’s plan are:

• All MasterCards to have the brand’s PayPass contactless technology by October 2012, with new merchants required to have at least one contactless terminal.

• All merchants able to offer cashback with purchases made using PIN on debit cards by the same date.

• A new mandate commencing in October for new cards to be compliant with the EMV microchip security protocol.

• A requirement for member banks to provide merchants with clear pricing on fees for credit and debit.