MasterCard

®

Paypass

Frequently Asked Questions
Q What types of merchants will benefit the most from MasterCard PayPass?
A MasterCard PayPass is ideal for traditionally cash-only environments where speed is essential, such as fast-food restaurants, drive-thrus, convenience stores, cinemas, self-service petrol stations, public transport, pharmacies, multi-storey car parks and toll roads. The most significant time savings were realised at drive-thrus, where MasterCard PayPass shaved between 12 and 18 seconds off cash purchase times.
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Q How does pricing work for merchants? Are MasterCard PayPass transactions more or less expensive than traditional credit and debit transactions?
A The use of MasterCard PayPass technology has no bearing on pricing. Pricing is entirely dependent on the underlying, existing payment application.
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Q How does this “non-verified” transaction change the payment guarantee for the merchant?
A The use of MasterCard PayPass does not change the payment guarantee for merchants. Existing rules in place for the product/merchant category in which the transaction takes place continue to apply when data is passed across a contactless interface.
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Q What are the costs involved?
A To accept PayPass payments, merchants can choose to implement a plug-in peripheral reader or a fully integrated system. Costs will vary depending on the selected solution.
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Q What type of technology is used for MasterCard PayPass?
A In keeping with our overall strategy to create globally interoperable payment solutions, MasterCard PayPass was built according to an open industry standard for radio frequency communications – ISO 14443.
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Q Which vendors are working with MasterCard on MasterCard PayPass?
A Current vendors developing products/services for MasterCard PayPass include: (a) Chip Manufacturers: Infineon, Atmel, Philips Semiconductor (b) Card Manufacturers: Colourado Plastics Inc., Oberthur USA (c) Card Personalisation Bureaus: First Data Corp, and (d) ECR/POS Providers: Verifone, OTI Inc., Panasonic, ViVOtech, Hypercom, Counter Solutions.
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Q Is MasterCard PayPass currently being used? If so, where?
A On 30th September 2003 MasterCard reached an important milestone with the conclusion of its nine-month MasterCard PayPass market trial in Orlando, Florida, with Chase, Citibank, and MBNA. More than 16,000 cardholders and more than 60 retailer locations participated in the market trial. In addition, MasterCard worked with Nokia, AT&T Wireless, and JPMorgan Chase to incorporate MasterCard PayPass into mobile phones in Dallas, Texas. Here, consumers simply tapped their phones to make payments. Additional financial institutions will begin issuing MasterCard PayPass cards starting in 2005.
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Q What did MasterCard learn from its PayPass trials in the US?
A Consumers respond to PayPass. Trial results in Orlando, Florida indicated that consumers find MasterCard PayPass to be simple, fast and convenient. MasterCard PayPass cardholders value the added security that they receive from retaining possession of their card while paying. Consumers also like the convenience of not carrying cash for everyday purchases and not having to use cash machines as frequently. MasterCard saw a top-of-wallet trend emerge among PayPass cardholders. Specifically, there was an increase of nearly 23% in transaction volume compared with the same period in 2002, and an even higher increase of nearly 28% in total weekly spend versus 2002. MasterCard also saw a pattern of frequent usage emerge. Month over month, an increase of over 12% was observed in transaction volumes at PayPass merchants. MasterCard saw clear evidence that consumers were using their PayPass cards where they once would have used cash. The average PayPass transaction size during the trial was around $21, and 80% of PayPass transactions were for purchases under $25. Results of the Orlando trial also verify that MasterCard PayPass can offer significant time savings to retailers. In some locations, MasterCard PayPass reduced purchase times so substantially that retailers were able to support additional transactions and thus potentially increase revenues. The most significant time savings were realised in drive-thrus, where MasterCard PayPass shaved between 12 and 18 seconds off cash purchase times. Initial results from the MasterCard PayPass trial in Dallas, Texas, reinforce speed and convenience as top benefits.
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Q How much does MasterCard PayPass technology speed up an average/standard cash and credit retail transaction?
A The MasterCard PayPass programme builds upon the successful employee trial that recently took place at the MasterCard headquarters in Purchase, New York. Initial results from the employee pilot showed that purchase transaction time was reduced by up to 64%. In addition, the average transaction amount increased by 10% when using a payment card in lieu of cash. However, transaction times are clearly dependent on a number of additional factors relating to a particular merchant’s implementation of the technology (e.g. integration into existing point-of-sale systems, dial-up vs. high-speed connections to acquirers, etc.). MasterCard PayPass reduces the transaction time for some elements of the process (no card or cash handover to merchant, no card orientation issues, faster data transmission for card transactions, no change for cash transactions, etc.) so the overall transaction time is generally shorter than the equivalent process today.
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Q What were the most significant findings from the MasterCard consumer payment trends research?
A Prior to the launch of the world’s first MasterCard OneSMART® PayPass™ Chip Combi Card, better known as the TaiwanMoney Card, MasterCard conducted extensive research among credit and debit cardholders across three major cities in Taiwan.

The majority of survey respondents felt that contactless cards would have a positive impact on speeding up payments (60%), making payments more convenient (57%), and making payments more secure (53%).

Speed and convenience were cited as the primary advantages of contactless cards, and 56% of the respondents stated that they were likely to apply for a contactless card when one becomes available.

Speeding up the checkout process was named as the most important attribute of contactless cards in the survey.

Petrol stations (73%) and supermarkets (70%) were seen as the two places where contactless cards would provide the most value, followed closely by department stores (67%), convenience stores (63%), road tolls (61%) and trains/subways (60%).

Additionally, 59% of those surveyed felt that contactless cards would be easier to use than a traditional magnetic stripe card.
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