Discover card has begun issuing Discover Zip contactless credit cards and stickers, targeted at early adopters of its mobile technology for increased speed and convenience at point-of-sale.

Select Discover card members began receiving contactless cards and stickers in the mail on Nov. 15. Additional plastics and stickers will be issued to more card members beginning in January 2011.

“Discover has played a leading role in contactless technology working with merchants to certify contactless readers for many years, and was the first to test credit-based contactless stickers,” said Laura Gingiss, senior manager of public relations at Discover, Riverwoods, IL.

“This roll-out of contactless devices demonstrates our commitment to mobile payments today and underscores our desire to enable consumers to interact with their chosen form of payment,” she said.

“Consumers are proving everyday that their mobile phone is an indispensable part of their lives. Payment is just another spoke in that wheel.”

Discover Zip
Discover Zip is a payment service that enables fast and convenient transactions with enhanced security features via contactless technology.

Consumers simply touch a payment device, which is in the form of either a plastic card or a sticker that can be applied to a mobile phone or any personal item of their choosing, to a Zip-enabled contactless reader to make a payment.

Currently, over 100,000 U.S. merchant locations offer contactless readers that accept Zip transactions at the point-of-sale, including quick service restaurants, gas station and convenient stores, retailers and pharmacies and public transit agencies.

Discover is not new to the contactless space.

The company’s payments business, Discover Network, has worked with merchants to certify contactless readers for many years, and was the first to test credit-based contactless stickers.

Discover claims that issuers, merchants and acquirers can benefit from Zip with increased transaction volume and customer loyalty.

Addressing challenges
Contactless or near field communications (NFC) addresses two main challenges:

1. Ease of use for the consumer and merchant – For consumers, payment is made with a simple tap with a device that is always close at hand. One can leave home with their phone and little else.

The consumer places their Zip device near the “hand and wave” logo and payment is made.  It works consistently and is familiar to anyone who has an ID badge to access their office building or uses a transit pass.

Contactless also requires no mobile “signal” in order to work. If consumers are in a store, in the subway, or somewhere where there is no cellular signal, they can still make a payment. 

For merchants, once they install the reader, there is minimal impact to their internal and merchant processing systems.

Issuers, merchants and acquirers can benefit from Discover Zip with increased transaction volume and customer loyalty.

2. Security – The contactless device never leaves the consumers hand. It has a maximum reading distance of a few inches, and it has an embedded security code that changes with each use so contactless devices cannot be cloned.  

“Consumers are proving everyday that their mobile phone is an indispensable part of their lives,” Ms. Gingiss said. “The phone is no longer just a device used to talk to or send messages to friends and family. 

“It’s the camera you use to capture memories instantly and post to Facebook,” she said. “It’s your pocket computer. It emails and has GPS-based maps. Literally, it has an application for just about everything. 

“If the consumer can do all of these everyday tasks with their phone, why not pay, see your balance, sign up for this quarter’s Cashback Bonus offer from Discover? Payment is just another spoke in that wheel.”

Final take
Capgemini highlights the potential of the mobile payment market for banks and communications operators, outlining the key issues players must address based on its experience.