7-Eleven's CIO: Contactless Payment Is Here - ' Miniaturization Makes Contactless Payment '
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Another key factor that pushed Morrow to open the contactless floodgates, he said, is the recent miniaturization of RFID chips.
When 7-Eleven started contactless trials three years ago, "We put them on the back of an ID badge that was about the size of a credit card. The RFID chip and the antennae were more than half of the back of the card. It was kind of an unwieldy size for RFID chips and the readers were also pretty large and clunky," he said. "The size of the chip now is probably one-twentieth of the size when we did the pilot."
Changing form factor is just one of the challenges of implementing RFID, along with signal conflict and picky, inaccurate readers. To read about how some major retailers and manufacturers are trying to work around RFID's eccentricities, click here.
And the further adoption that 7-Eleven and Chase hope to spur will, in theory, push size reductions even more quickly. "There are already RFID chips that are a very few microns: the size of a pinhead" in research-and-development formats, dubbed "'RFID dust,'" Morrow said. "We hope to drive the adoption."
That miniaturization will mostly fuel the next stage, in which the payment devices move beyond credit cards into cell phones, fobs and various other small devices.
"In Tokyo, they have gone very rapidly from cards to cell phones. They have embedded the RFID chip and it interacts with the cell phones themselves," allowing the payment system to use the phones' screens and speaker systems, Morrow said.
"So you can see your purchases, see your retail receipts right on your cell phone. You can return and they can also do couponing through that," he said.
But Morrow added that he doesn't expect similar deployments to happen as quickly in the United States. "The United States is still a credit card market," Morrow said, adding that cell phone issuers and credit card issuers must work together to make the next transition. "We've got to get those two groups cooperating and working together, and we're not quite there yet."
Although it will be a difficult move in the United States, "a cell phone offers a lot more utility than a credit card," he said.
Beyond embedding an RFID chip inside a cell phone, there are other ways to allow cell phones to be used to make purchases, as some cutting-edge retailers have discovered. To read more, click here.
Security is another crucial concern for 7-Eleven and contactless payments. Just as in the early days of e-commerce more than a decade ago, consumers will need to get comfortable with this technology and not fear that the unknown necessarily translates into higher risk.
From the retailer's perspective, Morrow said, contactless security is equally strong as traditional magnetic stripe cards in some respects and stronger in others, depending on the nature of the security or fraud threat in question.
The fear that identity thieves will steal personal information by sitting in a supermarket or a 7-Eleven with a wireless laptop—akin to the very real security problems with many wireless corporate LANs and so-called "wardriving" parking-lot access thieves—is not an issue because of the extremely and deliberately short read-range of contactless cards.
Click here to hear Morrow discuss what he sees as the security problems contactless will have to overcome and why 1 min., 7 sec.
It will take time to educate consumers, he said. "Let's say there have been some issues—in the early days—about what if [the RFID tag] could be irradiated or read very remotely, let's say 'across the room' or 'as I drove by.' As people have become more educated about the technology, [they have come to realize that] it's all a product of that antenna and what distance is engineered into the product. Ours is less than two inches," Morrow said.
"So, yes, some people could be concerned that somebody could read that chip or pick up the signal, but it's such a close proximity that basically it's either a matter of tapping it against the reader or within an inch or so, so it would be very difficult to orchestrate something like that," he said.
Next Page: Addressing contactless security fears.
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