Subject: [NEXTEL-1] American Express trials RFID payment scheme

From: [email-masked]
Date: Mon, 04 Aug 2003 02:12:29 -0400

American Express expands radio payments test

By John Cox

Network World
07/21/03

American Express is expanding a wireless payment scheme to 175 retail locations in
the Phoenix area, in a test designed to confirm whether the radio technology can
pay off at the cash register. 

The company's ExpressPay uses a radio frequency identification (RFID) chip in a
key-chain tab. Waving the tab at a distinctive scanner triggers the chip, which
transmits encrypted credit card data. Initial beta tests by the card company last
year showed that users could pay for a sandwich or milk shake up to 40% faster
than by using cash, says a spokesman for the New York credit card company. 

Another key point for retailers is the beta test found that users spent about 20%
to 30% more on average in each purchase than when using cash. 

Those kind of results catch the attention of executives in a whole lot of retail
outlets, such as fast-food restaurants, supermarkets and drugstores, says David
Krebs, who tracks RFID technology for Venture Development, a market research
company. 

"[If confirmed,] those are very attractive results," he says. "Speed of checkout
is a huge concern for retailers. The number of customers that one employee at a
cash register can process is a key metric for retailers. They're trying to manage
and minimize labor costs." 

To put ExpressPay to the test, the card company has set up RFID scanners at Dairy
Queen ice cream shops, Carl's Jr. fast food restaurants, Kwik Kopy Printing shops
and other retailers throughout greater Phoenix, stocking each site with
explanatory brochures and application forms, according to American Express
spokesman Tony Mitchell. The company would like to convince about 30,000 people in
the Phoenix area to use the wireless payment option. 

There are roughly 4,000 ExpressPay users in the area now, but most of them are
American Express employees. They began using the radio tag during the beta test
last year, at cafeteria's in the company's Phoenix and later New York City
campuses. 

The RFID tags are from Texas Instruments. They use a 13.56-MHz radio chip, which
allows for a very small, flat device, says Bill Allen, marketing communications
manager for Texas Instruments' RFID Systems Division. The chip is embedded on a
thin plastic film, and the antenna is etched onto the film. American Express is
using, in both tag and reader, the ISO 14443 standard for "contactless proximity
cards." The standard specifies the radio frequency, air interface and other
protocols, including security protections. 

ExpressPay encrypts the data being sent from the key-chain tag to the scanner. A
random number generator changes the security code to avoid having it repeat,
making it even harder to decipher. 

The ISO 14443 security, coupled with the fact that ExpressPay is, in effect, just
a personal credit card in a different form, seems likely to defuse arguments by
privacy advocates, warning about the danger of RFID "spy chips." 

Wal-Mart's recent decision to cancel a one-store RFID trial using scanners on
store shelves and RFID chips tucked into Gillette razor packages, was hailed as a
victory by privacy advocates. The advocates say Wal-Mart canceled the project
because of an outpouring of consumer protests. A spokesman for the chain says the
company is focusing on using RFID in its distribution centers.

  http://www.nwfusion.com/news/2003/0721amex.html

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