Canadian retailers may have to consider making changes to their point-of-sale systems once MasterCard rolls out a payment mechanism that will allow consumers to tap or wave their credit cards instead of swiping or signing them.

MasterCard recently said it was expanding its use of PayPass cards,

which use radio-frequency identification (RFID) to make payments through a special reader installed at merchant locations. The credit card firm’s key partner so far is McDonald’s, which will be rolling out the readers at restaurants in Dallas and New York later this year.

Nagesh Devata, MasterCard Canada’s vice-president of commercialization, said the company would likely bring PayPass to Canada sometime in the next 12 to 18 months, after the technology has picked up more converts south of the border.

Contactless payment cards usually integrate RFID chips in a form factor that is easy to carry and often more convenient than the process of paying with a traditional credit card. American Express, for example, has a similar payment system, ExpressPay, which uses a keychain in place of a card.

“”We are looking at other types of things — fobs or keychains — but the reason we started with the card was it made the most sense to the consumer, and to the merchant,”” Devata said. “”It was something you had in your wallet to start with.””

MasterCard is in talks with Canadian merchants to figure out where it would be best to launch PayPass, but Devata said they would most likely debut it in major urban centres. MasterCard created the PayPass specifications, but they are based on the ISO 1443 standard, which Devata said would offer the openness necessary for compatibility with next-generation payment systems.

Forrester Research analyst Penny Gillespie in Washington, D.C., said the contactless payment trend was kicked off by Exxon Mobil, which introduced the SpeedPass in 1997.

“”It speeds up the transaction process, and that’s generally a big one with merchants and consumers,”” she said. “”In all the tests, what they found was that customers seem to spend more money when using radio frequency card in lieu of cash or cheque.””

Share on LinkedIn Share with Google+