RFID Speeds Meijer Checkout


    GRAND RAPIDS — When Meijer Inc. began accepting the MasterCard PayPass at all of its 171 supercenters last week, it became the first supercenter in the United States to offer a “contactless” payment option chain-wide.

    MasterCard PayPass terminals are now installed at all point-of-sale registers, checkout lanes and departments within each Meijer supercenter, as well as in all Meijer gas station C-stores. All Meijer gas station pumps will be PayPass-enabled by November, said Michael Ross, director of marketing strategy and customer relationship management.

    The MasterCard PayPass card is embedded with a computer chip and a radio frequency antenna. Its embedded Radio Frequency Identification (RFID) tags make transactions via radio communication with an RFID-enabled payment terminal. The new payment method doesn’t require a signature on transactions of $25 or less.

    The card has so-called “blink” technology. It can be waved in front of a special reader rather than swiped through a traditional terminal, but it also bears the standard magnetic strip for those who prefer the swiping method.

    In addition to MasterCard PayPass, Meijer accepts American Express ExpressPay and Visa’s version of the contactless card, Ross said.

    “The big benefit is that it shortens the transaction time,” Ross said. “For us it’s going to reduce transaction time anywhere from 15 to 20 seconds, which makes a noticeable improvement at the checkout for those waiting in line. It’s going to help us reduce our costs at the same time.”

    Ross said Meijer has made a substantial investment in the technology, with upwards of 5,000 PayPass terminals installed when all is said and done.

    He said this fall and into the winter people can expect to see a lot of banks begin to reissue credit cards with the new contactless technology. Contactless payment will become prevalent in everyday life in a very short time, he predicted, and that’s why Meijer chose to be prepared to accept the cards.

    The same technology is embedded in the new Meijer Platinum MasterCard, which is being reissued to all current cardholders. Ross said that changeover will be completed by the end of September. The card doesn’t require a signature on transactions of $50 or less.

    “On the Meijer Platinum MasterCard we offer zero liability to our customers, so in the event they were to lose the card or misplace it, they’re not liable for any transactions they have not personally made.”

    The card can be used anywhere that MasterCard is accepted, and it earns the cardholder points for every dollar spent. Cardholders earn two points for every dollar spent at a Meijer store and one point for every dollar spent elsewhere, and when they’ve earned 2,000 points they get $10 in Meijer Bucks in their monthly statement.

    The credit card industry has been working on the RFID technology for several years. The technology has been used in tracking and access applications since the 1980s and caught on quickly because of its ability to track moving objects.

    “We’re an early adopter and we’re excited about that,” Ross remarked. “We’ve got a lot of bank partners and issuers who are eager to find retailers that will begin accepting the technology so they can justify reissuing cards to their customers.

    “We think that because we’re a first mover on this, we will encourage the marketplace to move at a quicker pace in reissuing cards to consumers.”

    Federal Reserve Bank of Chicago Senior Economist Sujit Chakravorti notes in the September 2005 issue of the Chicago Fed Letter that advances in technology have resulted in numerous payment method innovations, many of which offer potential benefits to payment system participants.

    “However, many have not been widely adopted because many payment system participants lacked sufficient incentives to change their behavior,” he writes. “Often incentives or disincentives are required to spur adoption.”    

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