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FRAMINGHAM – Customers who drive up to any of the more than 1,000 Arby’s restaurants can literally wave themselves through the payment window. The fast-food chain is one of the first to have rolled out support for contactless payment cards nationwide, both inside and at the drive-through. “We built it,” says CIO Don Zimmerman. “Now we’ll see if they’ll come.”

Contactless payment systems are based on a wireless technology embedded into some credit and debit cards and even key fobs from the major card issuers.

The systems use radio frequency identification (RFID) technology to complete transactions between a card and a store terminal without the user swiping the card. And since card readers follow the ISO 14443 messaging standard, any business with a compliant reader can process card transactions from any contactless card, including those from Visa U.S.A. Inc., MasterCard International Inc. and American Express Co.

Contactless RFID technology appears to offer something for everyone. For card issuers, it adds about US$1 to the cost of a card but represents the next step in the banking industry’s attempt to chip away at the cash economy by expanding the use of debit and credit cards for small transactions.

For consumers, contactless technology offers convenience. There’s no personal identification number to enter and no need to swipe a card, and transactions under $25 don’t require signatures. Users simply hold the cards about an inch away from the readers to activate them.

For merchants like Arby’s Restaurant Group Inc., where speed is important, card issuers promise faster transaction times. American Express claims that transactions using its ExpressPay-enabled credit cards can be completed in about one-third the time of a cash transaction and about half the time of a swipe-card transaction.

There’s just one problem: Only a tiny percentage of consumers have contactless cards today, and most retailers remain on the sidelines. Less than 2 percent of Visa’s 500 million cardholders in the U.S. currently have the technology. MasterCard has distributed 13 million PayPass cards and claims that 46,000 merchants now accept them. But the pharmacy chain CVS/Caremark Corp., which has had contactless readers in operation since 2005, says that less than 1 percent of its card transactions are contactless. “The adoption of the technology by consumers remains very small,” says a company spokesman.

If that changes, McDonald’s Corp. will be ready. The fast-food giant has been prepared for contactless payment for two years. “We’re deployed in all of our restaurants in the U.S.,” says David Grooms, vice president of IT at McDonald’s USA. So far, however, there have been few takers.

After you The problem, says Bruce Cundiff, an analyst at Javelin Strategy & Research in Pleasanton, Calif., is “trying to get over that chicken-and-egg proposition” in which merchants are waiting for the users and vice versa.

Still, Arby’s is pleased with its early results. Gavin Waugh, the company’s senior director of finance, won’t discuss actual numbers but says that “the general trend is positive.” But Arby’s put the technology in because it was a convenient time to do so, not because it expected to see an immediate benefit. Zimmerman was upgrading the company’s in-store point-of-sale (POS) system and decided to add the capability, which cost about $150 per terminal.

Zimmerman says it’s challenging to find the tools he needs to manage the contactless readers on a large scale. “Like any new technology, it isn’t all there yet,” he says. “The real challenge is to be able to deploy it broadly in a big chain with rock-solid reliability.”

Even so, Wakefern Food Corp. deployed the technology in its ShopRite supermarkets late last year. A spokeswoman says the chain hasn’t seen any quantifiable benefits, nor does it expect any. “The benefits are really for the consumer in its ease of use and convenience,” she says.

The San Francisco Giants baseball team is another early adopter. The organization uses the technology in 100 of the concession stands in its home ballpark, AT&T Park. Like Arby’s, the team added contactless terminals as part of a major POS upgrade. The new terminals required some integration work. “It wasn’t plug and play, that’s for sure,” says IT director Ken Logan.

Since the kinks were worked out, the new terminals have for the most part operated smoothly. “The only drawback is just keeping people from spilling a beer on it,” he says, noting that the terminals sit on the counter for better visibility. “They get pretty dirty and sticky.”

So far, less than 1 percent of the park’s transactions have been contactless. “The cards just aren’t in the marketplace yet,” Logan says. But management plans to upgrade 100 more terminals this year. Next, Logan envisions issuing a season ticket contactless card that would allow entry to the park and is tied back to the customer’s credit card for purchases.

Despite the slow uptake, analysts expect adoption of contactless cards to increase. “We see a significant ramp-up from a very low base,” says Jonathan Collins, an analyst in the Oyster Bay, N.Y., office of ABI Research. But, he adds, “it won’t happen overnight.

“We’re seeing great momentum, but we’re still in the early stages,” says Pam Zuercher, vice president in product innovation at Visa U.S.A.

A major hurdle for banks will be getting retailers other than fast-food restaurants and convenience stores on board. “How are you going to extend that to merchants where the speed of the transaction doesn’t really matter? That’s the tough business case,” says Cundiff. “We haven’t seen — and I don’t think we’ll see in the next two years — widespread acceptance at the grocery stores and Best Buys.”

Phone it in What ultimately may drive acceptance of contactless technology with users, and ultimately merchants, is its integration with mobile phones. Several pilots have been conducted, including one that Atlanta Spirit LLC, the company that operates Atlanta’s Philips Arena, completed with AT&T Inc., Nokia Corp., JPMorgan Chase & Co. and Visa last year at the arena.

Atlanta Spirit, which is also the parent of the Hawks basketball team and the Thrashers hockey team, is laying the groundwork for another test later this year, says David Lee, vice president of business development. “While contactless is great in terms of ease of use, we think there’s a greater proposition by way of the mobile device,” he says. Unlike contactless cards and key fobs, mobile phones include a Near Field Communications (NFC) chip set that can work both as a contactless payment card and an RFID tag reader.

Using NFC phones provided by Nokia, 150 Atlanta Hawks and Thrashers season ticket holders who signed up for a Chase credit card could use the cell phones to pay for food or merchandise at 200 POS terminals in the arena.

But Lee was looking for more than hot dog sales. When users passed the phone over RFID tags embedded in posters displayed on the concourses, their browsers were directed to a mobile Web “landing zone” where fans could view and download game information, videos and other content, as well as special promotions. “It’s all about getting what’s relevant at the time into the hands of the consumer,” Lee says. Beyond POS

Smart phones are central to an overall strategy that includes not just POS payments but also e-commerce and social networking. The NFC phones, Lee says, will become an initiation point for an ongoing dialogue wit

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