Six years after its launch, American Express is discontinuing its Express Pay contactless payments key fob following a poor customer response. Instead, it plans to focus on its traditional cards. The company will install computer chips in cards that will allow them to be held up to an electronic reader rather than being swiped through a device.
"We have actually found that our customers prefer to use the contactless technology through our traditional cards" rather than the key devices, Richard Flynn, a senior vice president who oversees "cardless" payments at AmEx, told The Wall Street Journal.
Contactless technology is expected to speed customers through checkout lines, and fast-food restaurants and drugstore chains have been among the most enthusiastic merchants to try the new technology. A report issued by Aite Group, a payment-industry consulting firm, estimated that some 40,000 merchant locations are already equipped with contactless readers.
Skeptics, according to the WSJ article, claim contactless technology is flawed because crooks can buy readers and swipe electronic data from unknowing card holders just by getting close to them. But card companies contend they pose no greater risks than traditional cards and are embedded with encryption software to prevent easy duplication.
Other card companies are still testing different devices. Bank of America offers a "mini card" that attaches to a key chain and is swiped through a traditional reader. MasterCard has tested a wristwatch with contactless technology. Visa recently made a "micro tag" key fob available to financial institutions that issue cards with its brand. Citigroup is testing a hard plastic contactless payment tag being used in the New York City subway system.
Card companies also are testing numerous types of contactless payments that are made through mobile phones. This technology is increasingly viewed as more promising than some of the other devices, but isn't expected to be widely accepted in the U.S. for a number of years.
Contactless cards represent three percent of all debit cards in circulation and less than one percent of credit cards, according to Aite Group.
Discussion Questions: Why do you think Amex's Express Pay key fob failed? What does this say about the hurdles still left to rolling out contactless technologies across retail?