Payments Made Easy

Picture this: You walk into McDonald’s, order your favorite burger, simply wave a plastic card, collect the burger and move on. Or this: You are out at the movies, at the ticket counter you simply flash your cell-phone and two tickets to the latest blockbuster are all yours, just like that! Welcome to the world of

PayPass!

PayPass is MasterCard’s innovative contact-less payment initiative, which offers a whole new way of making payments. On the inside, the PayPass card isn't much different than a credit card. Lets take a look at what is inside the credit card and how it works.

Credit cards are manufactured at authorized and secure facilities where a thin magnetic strip (containing the relevant information regarding the bank details of the card holder) is fitted in between a plastic casing. When this card is presented to

the vendor, he swipes the magnetic portion of the card through the card reader. The reader reads the information and asks the central server to authorize the transaction. If authorized, a receipt (2 copies) is printed for the customer to sign on. The vendor then matches this signature with the one on the back of the credit card to complete the transaction, keeping one copy of the receipt while giving the other to the customer.

Payment processing via your credit card takes an average of 30-60 secs from the time the customer presents the card to the

vendor, to the time he's handed back the card and the receipt. This time is long and noticeable for small-value transactions.

Look at it this way. You probably wouldn't mind having to wait for 60 secs as your payment is processed when you've spent half-an-hour buying clothes worth Rs 3000. But, would you be willing to do the same if you dropped in to the neighborhood store to buy a loaf of bread and half-a-dozen eggs and your total bill came out to Rs 23? 

And it is these low value transactions, which all of us are involved on a daily basis, and which have so far been essentially a cash-only

domain, that PayPass wishes to cater to. 

Armed with a small chip and a miniature antenna inside the plastic casing, in addition to the magnetic strip of a regular credit card, PayPass aims to reduce your transaction time. Instead of swiping the card through a card reader, one simply needs to take the card close to a PayPass reader and the information is transferred from the magnetic strip to the reader over very short-range radio frequencies. The reader then seeks authorization from the central server, and, if authorized, the transaction is complete. The customer no longer needs to sign the receipt; in fact there is no receipt, unless you specifically ask for it. Both the signature and the receipt have been eliminated from a typical PayPass transaction so as to speed up the whole process.

Trials of the card have indicated a transaction time of 4-5 secs, compared to the 15 secs that an average cash transaction takes. Also, elimination of cash from the picture removes hassles and disadvantages of managing the cash and trying to remember where all you spent money. In other words, cash transactions are difficult to track and messier than plastic ones.

Also, with PayPass you no longer have to worry about some miscreant merchant stealing your credit-card number because you can choose to complete the transaction without letting the card out of your hand. In fact, you could rake up reward points while keeping the card buried inside your wallet. Users of access cards at places such as Delhi Metro, toll bridges or their offices would know all about this.

Merchants wishing to encourage contact-less payment can opt for a brand new PayPass reader or invest in a reader that can be attached to the existing hardware. No major software changes are required. If the merchant doesn’t wish to switchover, do not worry. PayPass is 100% compatible with your existing card and will work as a regular credit card (MasterCard) at merchants who do not accept

PayPass.

Security Issues



Even though this card doesn’t need signature verification, it is secure. Credit cards have traditionally been less safe than debit cards (which are authenticated via a PIN) and this one isn’t much different. So, removal of the signature isn’t that big a step.

An added level of protection has been given by restricting the maximum amount of a contact-less PayPass transaction to a certain amount (say Rs 500). All transactions above that limit have to be through the normal swipe and sign routine. This limit doesn’t harm the PayPass because it is meant for smaller transactions.

This project is still under trial and only a selected few in Orlando (Florida) have been issued these cards. But, other interesting applications of the technology are being seen. Nokia has come up with brand new PayPass enabled phones, as well as phone covers which can be attached to your existing phone that work exactly like credit cards.

Kunal Dua