PayPass Trial in Italy To Tap Prepaid-Card Market
MasterCard Worldwide’s announcement last Friday (19th July) of plans by Italy’s postal bank to pilot PayPass could give contactless payment its first real test in the growing prepaid-card market.
BancoPosta, the financial services arm of Poste Italiane, will launch the trial by the end of the year, offering prepaid cards to new cardholders with the PayPass application onboard, according to MasterCard. Cardholders will be able to tap to pay at a relatively small number of merchant locations in Rome and Milan during the six- to eight-month trial.
Nearly all of the more than 14 million PayPass cards or tokens issued to date are either credit or debit cards. Few are prepaid, said Arne Pache, head of solution deployment in Europe for MasterCard. They include some of the 100,000-plus TaiwanMoney cards banks in Taiwan have issued for use with both merchants and transit operators in southern Taiwan. Also, MasterCard gave away a reported 5,000 novelty wristbands loaded with contactless chips and $25 (18.08 euros) credit to fans at a New York sports stadium last year.
BancoPosta, which also issues debit and credit cards, has rolled out more than 3 million prepaid cards, he said. Prepaid cards that carry the brand of the major card organizations are accepted anywhere the brand is accepted for credit and debit cards. While cardholders only can make purchases up to the amount loaded in their prepaid accounts, they don’t need to have credit or banking accounts. Consumers usually can reload the card accounts at post offices and retail outlets. The prepaid cards are different from electronic purse cards, which also are prepaid and reloadable. But these are used in closed systems, with value generally stored on the card so that transactions can be authorized offline.
According to the Poste Italiane Web site, its prepaid cards are accepted in the Visa International credit and debit networks, and it wasn’t clear if the bank also issues MasterCard-branded prepaid cards at present. The postal bank does issue MasterCard-branded debit cards, along with credit cards that carry either the Visa or MasterCard mark.
Results of a study commissioned by MasterCard and released by the card scheme in May projected European consumers would spend USD 163 billion (117.9 billion euros) with prepaid cards by 2010, which will be more than a quarter of the global total. The study, conducted by the Boston Consulting Group, projected the United States would account for just under 46 pct of total prepaid-card spending. Italy would rank fifth worldwide, just behind the United Kingdom. The projections include prepaid cards issued by governments to deliver welfare benefits, as well as prepaid gift cards.
U.S. issuers also are said to be interested in moving contactless payment to prepaid cards. In addition, MasterCard is funding development of a disposable paper PayPass card that could be used for transit-fare collection by users who don’t have credit or bank accounts.
Both PayPass and Visa’s contactless payment application, Visa payWave, target low-value transactions, of 25 euros (USD 34.6) or less. For the pilot in Italy, fast-food restaurants, supermarkets and cinemas will be among the types of merchants accepting the contactless payment, said MasterCard, which declined to reveal the number of locations planned for the test.
Cash now accounts for 93 pct of transactions in Italy, the highest in Europe, Pache said. The Poste Italiane pilot would be the first contactless retail payment test held in Italy.
The cards would comply with the international EMV standard, which is used mainly for credit and debit cards with contact chips.
Though the United States remains the main hub of activity for contactless payments with Visa- and MasterCard-branded cards, the major card schemes are involved in an increasing number of pilots and limited rollouts in Europe and Asia.
