FINspeak: Going Contactless at the Democratic National Convention

There was a buzz last month amongst the media attending the Democratic National Convention (DNC) in Denver. With thousands of excited delegates, politicians, and journalists converging in one area there was so much to talk about—Obama, Hillary, Biden… contactless payment-pins. Okay, maybe contactless payments didn’t stir up quite the excitement of a nomination acceptance speech. But underneath the undercurrents of political intrigue a prime example of payments innovation was on full display.

The technology unveiled was First Data’s Go-Tag Solution, a contactless payments device which was packaged as a commemorative DNC pin. The pin (with $10 of purchasing power) was distributed to members of the media during the first two days of the convention. Those who were lucky enough to receive the pin were able to make contactless payments at participating Pepsi concession stands.

Contactless payments, though still somewhat new, have been around for awhile now. In fact, there is a good chance that you already have a contactless debit or credit card. The problem that proponents of contactless payments are encountering is the lack of excitement surrounding contactless cards or fobs. Most consumers (myself included) feel there isn’t much difference between swiping and tapping.

The appeal of First Data’s Go-Tag Solution isn’t its contactless capabilities, the appeal is its packaging—a sticker. An account (phone, bank, you name it) connected sticker that you can put on the back of your mobile phone, eliminating the need to carry cash, card or wallet. For those that have lost a wallet on a crazy night out, at the theme park, or anywhere else, this is a chance to leave the leather at home.

First Data isn’t the first to enter the alternative-contactless market. Earlier this year Garanti Bank in Turkey was recognized for its implementation of On Track Innovation’s smart sticker. Other players in the United States and Europe continue to roll out similar products.

For these initiatives to succeed a consumer preference induced critical mass will need to be achieved, pushing retailers to install contactless payments devices. As of May 2008, only 109,000 merchants worldwide had installed MasterCard’s PayPass device. Obviously, this is a tiny percentage of the market. It will be interesting to see how much effect (if any) these new innovations will have on merchant acceptance of contactless payments.

Smstextnews.com has an interesting post about the Go-Tag.

The press release from First Data provides more information about its DNC debut.