Visa U.S.A. Inc., which has trailed other card companies in offering contactless payment technology, has developed its own program.
The San Francisco association said Thursday that it expects vendors to begin high-volume production of the contactless cards in January, using a new wireless chip design that makes the cards more cost-effective.
Niki Manby, Visa's vice president of market and technology innovation, would not discuss the cost of the cards. The value of the cards is about more than just cost, she said in an interview. "It's really about the whole package," including the quality of the product and its performance at the point of sale.
Ms. Manby also would not say whether any banks have committed to using them. "We'll let the issuers make their own announcements."
Visa International will market the technology globally.
Theodore Iacobuzio, a managing director in the executive research office at TowerGroup, a Needham, Mass., unit of MasterCard International, said that Visa needed to introduce a contactless system to keep up with MasterCard and American Express Co., which have been more aggressive in this developing niche.
Visa has pursued a "follower strategy" in contactless technology, though the market is quite young, and Visa's card will still arrive in time to be competitive, he said.
"Visa hung aloof while MasterCard did the stoop labor. Now they've said 'Me, too,' " he said. "Visa's got to step up to the plate and say, 'We've got one.' Otherwise, they lose market share."
Bankers are convinced that the contactless business is going to take off, Mr. Iacobuzio said. "The constituency that has to be convinced is the retailers," but that now appears to be a settled issue, too.
For example, McDonald's Corp. of Oak Brook, Ill., began accepting MasterCard's PayPass contactless cards at some of its stores a year ago and is starting to do so at more stores. "When McDonald's jumps in, you don't need to see much more research," Mr. Iacobuzio said.
Advocates of contactless card transactions say they are processed at the point of sale faster than conventional ones, so the technology is a good fit for merchants with high customer volume and low-value transactions, such as fast-food restaurants and convenience stores.
Card companies have been testing the technology for several years. It got a big boost in May when JPMorgan Chase & Co. announced plans for a mass rollout of Visa and MasterCard contactless cards. The New York banking company said last month that it had started issuing contactless cards to customers in the Philadelphia and New York areas, and that it expects to issue nearly 3 million this fall.
JPMorgan Chase markets both the Visa and MasterCard products under the Blink brand. The cards also have traditional magnetic stripes, so they can be used at any store that accepts Visa or MasterCard products.
In June, Amex said that it had begun including contactless chips in all of its Blue cards.
Visa worked with several vendors on its contactless card. Inside Contactless of Aix-en-Provence, France, designed the contactless chip. Smartrac Technology Ltd. developed an antenna that Visa says is smaller than others used for contactless cards, and having a smaller antenna enables issuers to create a variety of card shapes to differentiate their products.
Jacek Kowalski, the founder and chief executive of Inside Contactless, said his company "had to demonstrate to Visa we could meet their price objective," because banks would reject the technology if it were not economical.
Ariana-Michele Moore, an analyst at the Boston research firm Celent Communications LLC, said the high cost of embedded chips has slowed the adoption of contactless technology. Using less-expensive components would be "more cost-effective" for Visa's issuers, she said. "It would definitely give them a leg up."
She also said that Visa's lineup of vendors indicates that it wants to ramp up manufacturing quickly. "Unlike a mag-stripe card, which can be manufactured fairly quickly, making a chip takes time," she said. By having its vendors ready to go, Visa could gain market share.
