Credit Card Processing: Blink Cards

Contactless Technology

Credit card processing blink cards are part of the credit card reader contactless technology trend designed to eliminate cash purchases altogether. Chase Bank began a rollout test of 1 million blink cards to customers in and around Atlanta, Ga. in June 2005. Other cities are scheduled for similar tests. John Gould, director of the consulting firm TowerGroup expects tens of millions of blink-type cards to be in use by the end of 2006.

The current test rollouts are targeting fast-food restaurants, drug stores, convenience stores, and markets, including 170 7-Eleven stores, 300 stores in the Sheetz Inc. family-owned convenience store chain, CVS Corp. drugstores and Regal Entertainment Group movie theaters.

How Credit Card Processing Blink Cards Work

The issued blink cards have embedded chips utilizing RFID or Radio Frequency Identification Tags that transmit information to a reader once they are waved within an inch of the reader’s scanner. This technology is similar to electronic passes used on toll freeways or thruways. Signatures are not required, since the entire process is automatic and the cards never leave the customer’s hands. The entire process takes only a few seconds compared to the 30-second average of traditional credit card purchases.

Blink Card Readers Reduce Risk

Like their biometric counterparts, blink cards pose reduced risk of fraud since most thieves typically don't use stolen cards for small buys according to Gould. Since banks and credit card companies quickly note unusual card activity, Chase claims that blink cards offer the same security and privacy protections as any other card.

There is also reduced risk of third parties scanning credit card data because the card must be scanned very close to the reader head. The only risk remains if the consumer somehow lays down his/her card and walks out of the store. Visa, MasterCard and American Express have tested the RFID cards designed to be attached to key chains, which can prevent this occurrence, unless keys are lost or forgotten.

Boosting The ’Fun’ In Credit Purchases

The new RFID technology has been developed partly because the traditional process of buying with a credit card has grown a little stale, not changing much during the past 20 years. Anything new gives consumers a sense of novelty and can increase impulse buys.

Some investment Required

Credit card processing blink cards require readers that cost $150 to $200 to install. Some training is required.

How Retailers Will Benefit

While consumers like the convenience, retailers will like the decreased transaction times for credit card purchases. With traditional card purchases, processing is done by a customer swiping the card, waiting for a generated receipt, then signing the receipt. This averages about 30 seconds per transaction. Blink cards required only a quick wave, decreasing purchasing time by about half. With less transaction time and the tendency for increased sales due to novelty of buying on impulse, sales should increase. Customer perception should be positive with 30-40% reductions in wait times while in line.

Merchants involved in the pilot blink credit card reader programs claim 20 % to 30% sales increases compared to cash. This implication is huge for small businesses retail stores, where reduced transaction times translates to more customers, higher sales and increased customer satisfaction.

What Does The Future Hold?

Although credit card reader contactless cards are the technological buying wave of the future, they will not completely eliminate traditional credit cards because of the length of time traditional cards have been around and how ingrained they are into the U.S. culture.

For More Information, Contact:

MasterCard

Visa

American Express

Chase