Article discusses the trends in payment technologies like RFID biometrics to secure transactions.

1. Feature: Next Generation Payment Technologies
Gain Acceptance
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Next Generation Payment
Technologies Gain Acceptance
Internet payment tools, contactless smart
cards and biometrics offer convenience,
new levels of security
By Dawn Kehr, Correspondent for Source
Technologies
As debit, credit and Internet payments
continue to proliferate, card companies and
technology vendors have devised new
protocols and platforms that address the public demand for convenience while adding layers of security to
protect consumers' personal data. One of the most important developments in the last two and half years
has been the creation of the Payment Card Industry (PCI) Data Security Standard and Payment Application
Best Practices (PABP). Established and enforced by some of the largest credit providers in the country, the
standard and the best practices provide a framework for IT managers vested in protecting data security.
Just last week, Visa announced it will roll out a Level 4 merchant compliance program to help instill
improved security practices for these businesses, which account for 99 percent of Visa representation in
the country. "Data security breaches involving payment card information occur at small businesses more
frequently than at all other merchant levels combined," said Michael E. Smith, senior vice president,
enterprise risk and compliance at Visa USA. "We are committed to working with our acquirers and their
small businesses customers to get ahead of this growing vulnerability."
Aside from the requirements set by the card companies, there are an increasing number of technology
vendors who are challenging consumers and industry analysts alike to rethink how they complete
payment transactions. From e-commerce payment tools that put the customer in control, to radio
frequency identification (RFID) and biometric technologies that eliminate the need for cash to pay for
goods and services, the wallet could soon be a relic for a futuristic time capsule.
Processing more than $38 billion in payments last year alone, PayPal continues to lead the pack in
e-commerce payments on the Web. But with Google competing for market share, PayPal has expanded
its number of payment options and levels of security for both online merchants and buyers. Beginning in
June, it also developed partnerships with Northwest and Southwest Airlines to allow consumers, who
purchase airline tickets through the airlines' websites, to pay for them using debit, credit or a bank
account linked to PayPal.
"The airline industry is responding to consumer demand for a safer way to pay online, which is exactly
what PayPal offers," said Ralph Kaiser, president and CEO of UATP, the payment network responsible
for managing payments for 220 airlines worldwide. "UATP is able to help connect PayPal to the airlines,
providing the connections to fill customer demand and offer a lower cost payment option to the airlines."
Another e-commerce tool from Ottawa-based Modasolutions.com, called eBillme, offers merchants and
Internet shoppers a secure way to conduct transactions without ever having to share credit card
information. The technology is being touted as a deterrent to credit card fraud. In an interview with
Practical e -Commerce, President and CEO Marwan Forzley described eBillme this way:
"It can help both the consumer and the merchant. The consumers are providing no information to the
merchant, just their email address, to complete the transaction, and they then log into their bank and pay
the merchant the same way they pay their phone bill or their electric bill. The merchant is authenticating
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2. the consumer via the banks. We have a situation where the merchant and the consumer are both known
to their banking organization and the money moves bank to bank."
Forzley said merchants are charged no service fees to integrate their payment systems with the
company's and they can expect significant savings on transaction fees: between 30-50 percent when
compared to credit card transaction fees, which can run more than 2 percent per transaction.
The Smart Card Alliance reports that contactless payments are the fastest growing payment technology
available today. Introduced in the United States in 2005, the technology works by relaying radio
frequencies between an embedded antenna in a card, cell phone or wristband and a point of sale (POS)
terminal. Currently, some 51,000 merchants are using the technology worldwide. So far, the majority of
early adopters have been in industries where there is a high volume of transactions of $25 or less. This
includes fast food and convenience store chains, vending machines, and pharmacies.
In a survey conducted by Chase Bank, vendors using contactless cards reported that they saw a 30 to
40 percent reduction in customers' time spent at registers. That same survey showed that contactless
payments were 63 percent faster than cash and 53 percent faster than credit card transactions. In a
study conducted last year, the Smart Card Alliance reported that 51 percent of consumers reported a
better customer experience when using contactless cards.
Once only depicted in sci-fi films, the future of biometrics as a payment technology is a viable reality. San
Francisco-based Pay By Touch supports more than 2,000 retail clients nationwide. Vice President of
Business Development, Ryan Ross says the finger scan technology lends itself well to a multitude of
industry segments
Aside from flexible application to any industry, Ross says the technology's security is superior to any
technology in the market. "For customers it offers ease and security that doesn't exist elsewhere ... for
merchants, it gives them the protection of knowing that the person is truly who they claim to be. And for
banks, it adds yet another layer of protection against identity theft."
While it's hard to deny the security of fingerprints, the other payment technologies mentioned here have
not been without their share of debate regarding their security. It is important to note however, that data
security is not inherently the responsibility of the technology vendor, but also for the businesses
implementing payment technologies. Thorough implementation and user training is necessary to ensure
all of a chosen technology's safe guards are in place and activated, such as encryption for contactless
cards.
Another important factor to consider is that any technology, regardless how secure, will most likely be
challenged as new methods are found to compromise data. "As payment mechanisms and form factors
change, we can expect the security methodologies to evolve along with them," said Jack Jania, vice
president for financial services for Germalto a contactless card maker. "I see it as being inevitable.
Security is like a staircase you are always climbing."
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