Time Expiring for Speedpass?

  Timex Corp. may be known for making watches "that keep on ticking," but it won't be making any again soon that keep on paying. Timex and Exxon Mobil Corp. as of the end of March stopped promoting and selling Timex watches with built-in contactless Speedpass transponders.
  The companies launched the joint initiative in late 2002. Neither would discuss how many watches were sold from the Timex or Speedpass Web sites.
  "We were pleased with the test, but we've both mutually agreed to address other marketing opportunities," says an Exxon Mobil spokesperson. Timex officials did not return calls.
  The Timex announcement is the second major blow for Speedpass. Last year, McDonald's Corp. discontinued a Chicago-area pilot in which more than 200 of its quick-service restaurants accepted Speedpass for payment. The Oak Brook, Ill.-based company instead plans to embrace an open contactless system, MasterCard International's PayPass.
  Industry observers say the proprietary aspect of Speedpass is affecting the program's growth more than competition from open contactless systems from MasterCard, American Express and Visa. "It's extremely difficult in general to bring to market a new payment mechanism," says Gwenn B?zard, partner and research director at Aite Group, a Boston-based payments consultancy. "But it is difficult getting acceptance because of the strength of open systems like PayPass."
  Despite the setbacks, Speedpass is still the nation's most successful contactless payment system to date, and it is serving as a strong loyalty tool for Exxon Mobil. More than 6 million consumers in the U.S. have a Speedpass, most of which are key fobs, that can be used at over 8,900 Exxon and Mobil pump and in-store locations, according to the Irving, Texas-based petroleum giant. When consumers use Speedpass by tapping the radio-frequency transponder on a reader at the pump or in-store payment terminal, their preregistered credit or debit card information is accessed from a data base and used to initiate the purchase.
  For its part, Exxon Mobil is not ready to give up trying to grow Speedpass any further, though the company remains vague in terms of specifics plans. It appears for now Exxon Mobil plans to focus more on growing Speedpass use internally as opposed to finding other merchant participants or different devices to embed the transponders.
  Earlier this year, Exxon Mobil announced plans for a promotional campaign to drive Speedpass use during this summer's travel season. The company says it will offer its distributors financial incentives to install Speedpass readers at service stations and in the company's On the Run convenience stores, which now total more than 650 in the U.S. The company also says it will offer Speedpass users fuel discounts.
  In addition, new and current Speedpass customers will be able to earn rewards by using the device in On the Run stores. A spokesperson would not share details on incentives, discounts and spending on the campaign, though Exxon Mobil says it will promote the plan with on-site advertising, direct mail and store employee contests.
  Meanwhile, emerging open contactless systems appear to be gaining momentum. Indeed, millions of U.S. consumers will be introduced to such products in the next year, claims Paul Beverly, president of Axalto Inc., an Austin, Texas-based smart card vendor.
  Growth Coming?
  Based on bids being sought by issuers, there will be at least 5 million to 6 million PayPass devices issued in the next 12 months, Beverly says. "The question really is, after the initial rollout, how many more programs will occur? I don't think even the banks know for sure," he says.
  More merchants, especially fast-food chains, are preparing to deploy readers that can communicate with contactless cards, tags and stickers, Beverly says. Fast-food giant McDonald's has begun deploying PayPass readers, and drug-store chain CVS plans to accept AmEx's ExpressPay product. Visa USA has announced the availability of its contactless product, but there have been no rollout announcements.
  Some specialty vendors also are beginning to embrace contactless technology. Smart Transaction Systems, which provides magnetic-stripe stored-value and loyalty cards to 1,700 merchants, is adding contactless features to its products. "The most immediate application is in those situations like cafeterias and sporting events where you need to move people through lines very quickly," says Roy Clopton, president of the Boulder, Colo.-based company.
  Smart Transactions Systems "is the first of the major gift and loyalty providers to offer contactless card technology," Kevin Colaco of Concord, Calif.-based Paynet Transaction Services, said in a statement. Paynet works with Smart Transaction Systems on card programs.
  Clopton says he expects to offer tap-and-go products in a variety of forms, including plastic cards, keychain tags and stickers that can be applied to cards or other objects. He says the company plans to use Mifare Ultralight contactless cards, whose chips use the Mifare security technology from Philips Semiconductors of the Netherlands.
  Cross-Border Strategy
  Such printed cards cost $1.20 in small quantities, and less than $1 apiece when ordering several thousand, Clopton says, noting that is about double the price of a magnetic stripe card.
  Two other companies have agreed to work together to offer contactless prepaid payment and loyalty products. Toronto-based Dexit Inc. brings its expertise in low-value, prepaid payment, while Smart System Technologies of New York City brings a system that works with credit and debit cards and offers rewards to loyal customers.
  Their combined offering will be available this year, the companies say. Dexit will market the product in Canada and Smart Systems in the U.S.
  Michael Richardson, Smart System president and chief operating officer, says the prepaid feature will make Smart System's PowerPay contactless product more attractive to students and others lacking credit cards, as well as to merchants who do not accept credit and debit cards. He adds that the alliance will not prevent Smart System from also working with contactless products from Visa, MasterCard and American Express that tie to a card account.
  Richardson says thousands of consumers use PowerPay, which can take the form of a keychain tag or plastic card. Ford Field in Detroit and Lincoln Financial Field in Philadelphia, homes of the Detroit Lions and Philadelphia Eagles of the National Football League respectively, accept PowerPay for concession-stand purchases. Richardson says fast-food restaurants and retailers in Detroit and Philadelphia soon will begin accepting PowerPay.
  Pierre Roberge, Dexit vice president of research and development, says typical merchants accepting Dexit in the Toronto area include convenience stores and coffee shops. He says Dexit transactions average between $3 and $4.
  More than 47,000 consumers have registered to use Dexit, which comes in the form of a keychain tag or a sticker that can be applied to a cell phone or handheld computer, Dexit says. Some 350 merchants accept Dexit, which was launched in Toronto in September 2003.