Startup uses RFID to launch micropayment service

TORONTO — A Canadian startup plans to use technology originally developed for supply chain management and security applications to power the electronic processing of payments smaller than $20.

Dexit Inc. launched Tuesday inside

Toronto’s Union Station, where it had set up a variety of local merchants with point-of-sale readers that would accept its radio frequency identification (RFID) cards for small financial transactions. Users will be able to sign up for a Dexit account through the firm’s Web site or through sign-up forms at participating merchants. So far Dexit, which has been in development for two years, has formed agreements with about 40 independent merchants and the local operations of 22 national chains situated in Toronto’s downtown core.

Renah Persofsky, Dexit’s president and CEO, said users would be charged only $1.50 for loading new funds on the tag, while merchants would be charged an account fee in a manner similar to debit card transactions. Funds can be loaded through any Canadian bank, she said. The tags can be carried by themselves (Dexit passed around several at the launch on a retractable cord) or on Telus mobile phones. Users will have the option to be notified when the account is running low by e-mail, voice mail or fax, she said, or by checking online immediately following a purchase.

“”We’re going after a very specific market size,”” she said. “”If you look at debit cards, the main purchase point is $43 and with credit cards it’s $99. And those are going up. We’re talking about $5 purchases.””

The micropayment industry was once seen as a way of getting consumers more interested in business-to-consumer e-commerce. RFID, which allows users to electronically track a variety of items using FM transmission methods, is becoming more widespread in the business community as a way of wirelessly tracking industrial and retail products.

Don Tapscott, an author of IT books and a Dexit investor, said the firm’s micropayment method would “”speed up the metabolism”” of the Canadian economy.

“”Money is becoming ones and zeros, moving through networks made of air and glass,”” he said. “”If I can start a car from the air and open a garage door, why can’t I buy a doughnut?””

Canada is a natural test bed for micropayments, Persofsky said, given that it is the biggest user of debit card payments in the world.

However, Joe Greene, vice-president of telecommunications and Internet research at IDC Canada, said success at one level does not necessarily guarantee success at another.

“”They’ve got a niche market here,”” he said. “”There’s only a certain type of person that would go for this. They may prove me wrong — over time it may actually penetrate the market in a much bigger way, but right now it’s hard to say.””

Persofsky said Dexit hopes to sign up more merchants in downtown Toronto this fall before moving outside the city and eventually across the country. National Bank and TD Canada Trust are also partners in the venture.

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