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January 12, 2012 10:32 am
La Caixa, Spain’s largest retail bank, will on Thursday begin rolling out contactless, “tap and go” payments cards and terminals across Barcelona, in one of the biggest deployments of the financial services technology in Europe.
The bank will issue 1m cards to its customers containing a wireless computer chip which transmits payment straight to a merchant’s terminal when it is waved or tapped on a special reader. La Caixa is providing 17,000 payment terminals to merchants across the city, to ensure that customers can pay with a single tap everywhere from the largest department store to the smallest tobacconist’s shop.
The bank, which has teamed up with Visa Europe for the project, will also provide 500 ATM machines with contactless readers.
Contactless payments are beginning to be introduced in many parts of the world, with banks and payment services companies such as Visa and MasterCard hoping the system will gradually replace the use of physical cash for small purchases.
Banks receive a small fee for processing card payments – typically about 0.5 per cent per transaction for La Caixa – and are keen to extend the use of cards as far as possible. Card payments also allow them to collect data on their customers shopping and lifestyle habits, which can be valuable for sales and marketing purposes.
“The payment industry is changing and we want to have a leading position in this technology. It is a tool that creates a lot of convenience for customers, and will increase the share of card payments,” Antonio Massanell, managing director of Caixabank, said.
Although La Caixa is issuing the wireless chip embedded in traditional-looking bank cards, they can also be embedded in mobile phones or watches. Samsung already makes handsets containing payment chips and a number of other contactless-enabled mobile phones are expected on the market this year.
Last year, Google partnered MasterCard and Sprint, the telecoms operators, to launch the Google Wallet, for mobile payments. Restaurant chains such as McDonald’s and Starbucks have introduced contactless card readers across their stores, and Orange and Barclaycard launched a mobile payment system in the UK last year.
However, Barcelona will be the first European city in which the technology will be close to ubiquitous. Barcelona was selected as a starting point because La Caixa hopes to showcase the technology during next month’s Mobile World Congress, the key trade show for the mobile phone industry.
Mr Massanell said the bank would spend about €9m on equipping Barcelona, and would spend between €35m and €40m extending the programme across Spain over the next three years.
La Caixa, which has 10.5m customers, carried out pilot programmes for the payment system in Sitges, a small town in Catalonia, and in the Balearic Islands, which Mr Massanell said had been a “great success”.
Some 86 per cent of cardholders in those trials said they preferred using contactless cards, and merchants saw a 23 per cent increase in sales volumes.
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