Barclaycard, a large British card issuer, is upgrading the NFC-based mobile payment service it launched a year ago, we learn from various news reports this morning. Just as the original version, known as Quick Tap, the new service, named PayTag, enables users to make payments by waving their phones by an NFC-compatible point-of-sale (POS) terminal. The news is that PayTag charges the transaction amount directly to the user’s credit card, a sticky version of which is attached to the cardholder’s phone. By comparison, Quick Tap users had to create a separate payment account and transfer funds into it. So the new version is simplified and more consumer-friendly than the older one.
However, PayTag falls far short of what’s required of a mobile payments service in 2012, for a couple of reasons. Firstly, it is nothing more than an incomplete copy of just one of its user’s credit cards and secondly, it places a very low limit on the allowable transaction amount, which requires consumers to have a back-up payment plan. In other words, users would still have to carry their physical wallets. So what’s the point?
How PayTag Works
PayTag is an adhesive credit card, about a third or a quarter of the standard size, which is attached to its user’s phone, allowing her to make payments by waving the phone by a compatible point-of-sale (POS) reader at a participating store. Barclays claims that there are “over 100,000 contactless readers across the UK” and the list includes fast-food chains Eat, SubWay, MacDonald’s and Pret A Manger, among others. At first, PayTag will only be available by invitation, but eventually every Barclaycard holder will be offered the upgrade, we are told.
A relic from the Quick Tap days is the limit of ?ú15 ($24) on the amount of a single contactless purchase, which is set to increase to ?ú20 ($32) at the beginning of June. No PIN entry is required for any PayTag transactions (remember that U.K. payment cards contain an EMV chip, so the verification method is PIN entry, not a signature, as is the case in the U.S.).
What’s the Point?
The BBC calls PayTag’s announcement “the latest salvo in the battle to launch a digital wallet,” which I guess it might be, if one could muster the imagination necessary to see it as such. More than likely, however, is that PayTag would be seen in retrospect as a dead-end turn in mobile payments’ evolutionary path.
To begin with, PayTag is nothing like a mobile wallet. It is just an adhesive extension of a credit card that can be used for completing contactless payments. However, many regular credit cards already support contactless payments. The way I see it, the only novelty here is that a card is attached to its user’s phone.
And the thing is that you would still need to carry your regular credit card, in addition to the sticker. Why? Well, once it’s increased in June, the PayTag transaction limit will be the equivalent of $32. I don’t know about you, but most of my credit card transactions are for larger amounts. For example, my average payment at gas stations is around $65 or so (and gas is far more expensive in the U.K than it is here in the States) and it is about the same at grocery stores. In fact, the only swiped transactions that are consistently below the $32 threshold are my Starbucks payments. So yes, I would still need to carry my real credit card, along with the rest of my wallet’s contents. So really, what’s the point?
Mobile payment technologies promise to enable us to complete payments faster and easier than we can currently do. Eventually, they may allow us to store all of our payment account information into our phones and free us from the necessity of having to carry our physical wallets around. These are goals worthy of pursuing.
However, Barclaycard’s PayTag is not bringing us any closer to achieving these objectives. It merely adds yet another payment tool, an imperfect copy of one that we already have, into our arsenal. It wouldn’t necessarily be inconvenient to have it, but it would also not make our checkout experience any better or indeed, any different.
Image credit: Barclays.