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Chase Customers Can 'Blink' at Register

Chase Bank USA announced a national rollout for a payment system as fast as the blink of an eye.

Chase Bank U.S.A., N.A., a division of JPMorgan Chase & Co. , said it will begin national distribution of blink cards featuring contactless RFID technology.

Instead of handing cards to a cashier or swiping them, blink users will be able to wave their charge cards in front of a point-of-sale terminal. Special readers installed at cash registers will receive low-power, short-range transmissions from a chip embedded in the card.

The program will launch with blink-enabled point-of-sale devices at movie theaters, convenience stores, some drug stores and quick-serve restaurants.

"It's the places where Chase customers today have told us they want the opportunity to use their Chase cards," said Scott Rau, senior vice president for Chase card services. "Many of the places we're targeting for small-payment purchases are cash dominated, and they're slowly migrating to accept credit."

Nudging consumers from cash to Chase credit cards is good business for Chase, of course. It also could benefit merchants, said Jupiter Research analyst Bruce Cundiff. (Jupiter Research and internetnews.com both are owned by Jupitermedia.)

"These are the types of merchants for whom saving time means more revenue," Cundiff said, adding that consumers who use debit or credit cards tend to spend more per transaction than those using cash. "The business case being made by increased transaction volume, increased average ticket size and increased loyalty," he said.

But that time/revenue equation will have to be very attractive to get merchants to upgrade their payment infrastructures, Cundiff added, because merchants won't get any break on the fees Visa and MasterCard charge for processing transactions.

"For some merchants interested in competing in commodity driven-markets, anyplace they can differentiate and offer customers a better, quicker, more convenient experience drives customer loyalty," Rau said.

To handle blink contactless purchases, merchants will need to add peripheral readers available from several vendors, Rau said. Because the technology is based on a standard specification, the devices will also be able to read other contactless payment systems as they come onto the market.

Visa launched its RFID payments infrastructure in February. Chase has worked with MasterCard on contactless payments pilots since 2003.

Chase announced that 7-11 will test the cards in 170 of its stores, with the expectation that it will eventually blink-enable all 5,300 U.S. stores. Chase will announce more participating merchants as it issues blink cards in each market. The bank plans to add more merchants and locations to the program, with the goal of thousands of locations throughout the United States accepting Chase blink cards by the end of 2005.

Existing Chase consumer customers will be issued new blink-enabled cards, maintaining all the features of the programs they signed up for, including branding, loyalty programs and rewards. Ditto for new customers, who will be able to apply for a range of blink-enabled credit cards. Chase will provide the same data and security features as for traditional credit card transactions, and cardholders won't be liable for unauthorized purchases.

Chase will promote the cards using television, radio, newspapers and billboards, as well as through its regular communications with existing customers.

The deployment follows a pilot program in Orlando in 2003, as well as other tests. In the tests, Chase said, some transactions were reduced by as much as 20 seconds as compared to cash, with the most time saved in drive-through locations.

As part of the launch, Chase will issue blink cards co-branded with Sheetz, a family owned and operated convenience store chain based in Altoona, Pa. But for now, Chase will focus on its own blink-enhanced brand.

Cundiff found it interesting that Chase is emphasizing its own brand for blink. "As the first mover, it's a great marketing strategy. They're making it their own. They can afford to do it, because they're one of largest issuers."

Cundiff praised the bank for bringing its merchant services division to the party in order to help retailers get up to speed. "This is the first card issuer that has made a concerted public dedicated effort to get cards out there," he said. And, because Chase has such established merchant relations, "these cards will not go out in a vacuum. It bodes well for making this happen on a larger scale than it has to date."

Unfortunately, blink cards may not ease Americans' most frustrating waits. According to The Chase "Just in a blink of time" Index poll, conducted in April, Americans most dread waiting in lines at the doctor's office (27 percent) and the Department of Motor Vehicles (26 percent), followed by the grocery store (18 percent) and the airport (14 percent).