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MasterCard Inc. has begun distributing wristbands with contactless payment chips at festivals and other events. The wristbands, besides functioning as payment devices, also manage entrance to the events.
June 17
A new watch model available in the U.K. allows users to make contactless payments with a flick of the wrist.
In time, it may come to the U.S.
Laks GmbH and Vincento Payment Solutions Ltd. have developed the watch2pay wristwatch, which carries a SIM-sized contactless chip that supports prepaid MasterCard PayPass transactions, the companies announced Wednesday.
Laks, of Munich, Germany, manufactures the watches and manages the prepaid watch2pay program, while Vincento, of London, issues the cards.
Through a Laks subsidiary in Florida called Watch2Pay LLC, the product could make a U.S. debut near the end of March, after Laks establishes business partners for the product, Laks says.
Consumers may use the watch to complete transactions up to $23.45 by waving it near a contactless payment terminal, the companies say.
MasterCard establishes the purchase limit, however, in some countries the consumer can make a contactless purchase up to a certain amount and pay the rest by "tapping and entering your PIN code," says Zoltan Kaman, president and chief executive of Watch2Pay in the U.S. "This way you are even able to pay for a car with your watch."
There are some hurdles to be overcome before the product is launched in the U.S., he says.
"The licenses we have in the United Kingdom and Poland cannot be used in the U.S., and there is no single bank identification number sponsor that has all of the licenses issuing a PayPass card," Kaman says.
Kaman did not disclose if, or how much, participating banks pay for the Laks watches used in the watch2pay program or if Laks receives a percentage of each transaction completed with the watch.
Other European financial institutions, such as Garanti Bank in Turkey, Volksbank/Bank Zachodni in Poland and Takarekbank in Hungary provide the watch to customers interested in the prepaid program, Kaman says.
The companies developing the watch2pay program offer the watch to financial institutions as a way to promote client acquisition and to merchants to provide the additional potential for a closed-loop prepaid program, Kaman says.
A watch2pay wristwatch specifically designed for a closed-loop program has become a popular option for special events, Kaman says. The Sziget Festival in Budapest, Hungary, offered the watch2pay "event watch" that allowed festival goers to load funds into the watch account and use it the entire week of the festival at any of the 1,400 point-of-sale registers installed at bars, coffee shops, restaurants and retailers, Kaman says.
Exxon Mobile Corp. also tested the use of its Speedpass contactless service in a Timex watch. It stopped offering the watch in 2005 to address other marketing opportunities.
Banks issuing the watch2pay wristwatches also provide a standard-size MasterCard PayPass prepaid card, according to Laks.
Consumers using watch2pay commonly load funds into their card accounts through wire transfers, direct deposit or cash. Laks also allows funds to be loaded from other debit or credit cards, Kaman says.
Ukash, a London subsidiary of SmartVoucher Ltd., offers watch2pay users the option of loading funds into their watch2pay card accounts with Ukash vouchers.
The watch has an "integrated antenna" around its casing, which communicates information from the computer chip with the PayPass reader at the payment registers, Kaman says. The watch chip is not visible once inserted, he says.
