A new payment card allows users to see their balances right away with the technology they already have — no chips, fancy apps or even bookmarked mobile websites required.
Smart Transaction Systems Inc. has developed a retail gift card that uses a special type of bar code readable by many smartphones that can direct them to view the card's transaction history and other details. The card itself does not have any special hardware built in.
The Boulder, Colo., company prints a Quick Response code onto stored-value and loyalty cards. Research In Motion Ltd.'s BlackBerry phones and those running Google Inc.'s Android system are able to read them with built-in software, and free, commonplace QR code-scanning programs are available for other smartphone platforms, including Apple Inc.'s iPhone.
QR codes are regularly used in marketing and in portable devices to share information from a nonelectronic device such as a poster. For example, Android phones can follow links to websites or app downloads from QR codes, and Nintendo Co. Ltd. uses the technology to let owners of its newest handheld game system share data.
"There is nothing 'rocket science' about it," said Ray Clopton, president of Smart Transaction Systems.
"It's just that next step" in allowing consumers greater access to their card accounts with existing technology, he said.
This card opens up the lines of communication between merchants and their customers, observers say.
"Messaging offers, or promotions, or advertising can be delivered to the consumer. [This technology] takes that card functionality to another level," said John Grund, a partner at First Annapolis Consulting in Linthicum, Md. QR code-scanning has "left the realm of being fun and interesting and novel, and has converted it to more of an engagement model."
He said an individual retailer, using this strategy, could target different users with different advertisements based on how much cash is on a card. Consumers could also register their cards with retailers to receive free music downloads or redeemable rewards. That could give retailers a way to better track purchases.
Still, with so much account data visible with the click of a virtual button, some say fraud could be a concern. A criminal could even copy the card.
"If I can take a picture and it goes to that account and theoretically I can see the card number, potentially I could do a transaction off that card number," said Ben Jackson, senior analyst in the prepaid advisory service at Mercator Advisory Group in Maynard, Mass.
Despite the ease of implementation for issuers and retailers, there is still a learning curve for consumers, Jackson said.
"You are really leaving the user experience up to the user's tech-savvy," he said. "You'd think that the people that would tap into this would be familiar with these QR codes … but it could just be a point of a convenience."
Cost could be another issue. Whether or not it costs more to print a customer-specific QR code on each card, managing the program will almost certainly be more expensive, industry watchers said.
Smart Transactions Systems isn't the only company innovating around stored-value gift and loyalty cards.
First Data Corp. has rolled out a mobile coupon program for merchants called mVoucher that uses two-dimensional bar codes and text messages.
Starbucks Corp.'s smartphone app uses software from the mobile banking vendor mFoundry Inc. that allows users to pay for purchases by generating a bar code on a mobile phone. The app that displays the bar code also allows customers to reload their stored-value accounts over the air. Starbucks said this system cuts down on the amount of time customers spend at the register by allowing them to manage their accounts as they wait in line.
And many banks offer access to transaction history and other functions, such as bill payment, through dedicated apps or specially formatted websites. Many are also working to integrate payments through NFC chips, which can communicate wirelessly with special readers but are not commonly built into mobile phones today.
Smart Transaction Systems is still in the early days of offering the technology, which it announced Wednesday.
So far, it only has a few clients talking about implementing its QR code system.
"But we are going to be expanding it really rapidly," Clopton said. "Both to our customers as well as to everyone else."
