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Novartis Federal Credit Union's conversion of all 1,600 of its regular debit card accounts to contactless MasterCard PayPass debit cards has led to more debit card use among members and more interchange revenue for the credit union. Members of the East Hanover, N.J.-based credit union used their PayPass cards on average19.5 times in April. This compares with an average of 16.5 times in April 2008, says Tom Gandre, chief debit officer at PSCU Financial Services, a St. Petersburg, Fla.-based credit-union service organization that assisted Novartis with the conversion to PayPass in March 2008. Cardholders pay with their contactless cards more because they like the security the card provides them, Gandre contends. Instead of handing their card over to a sales clerk, cardholders tap the payment terminal with their contactless card, so the card never leaves their hands. The higher purchase volume has led to more interchange for the credit union, but Gandre could not provide specific revenue data. With Novartis, PSCU has help convert 250,000 regular debit card accounts 10 credit unions to either PayPass or Visa PayWave in two years, Gandre says. It is becoming easier to argue a business case to credit-union leaders on why they should convert to contactless cards, he adds. One reason is more retailers are accepting them, Gandre says, citing as an example Home Depot's recent announcement. Moreover, two merchant acquirers are planning to offer contactless card acceptance as a standard offering, he says, declining to name them. "It took two years to convert 250,000 accounts to contactless cards. We expect to convert the next 250,000 in a year, so you see the pace is picking up," Gandre says. Contactless cards also have a magnetic stripe, which enables cardholder to use the card at retailers that do not have contactless-payment terminals. Visa Inc. and MasterCard Worldwide say contactless cards are effective for transactions less than $25 because the associations do not require the cardholder to sign a receipt for such purchases. Visa and MasterCard also say contactless cards are important in getting individuals to pay with cards instead of cash for small purchases, Gandre says.
