Barcelona residents not yet conducting tap-and-go payments at merchant point of sale may soon find it easier to do so using their mobile phones.
La Caixa, the largest savings bank in Spain, continued its push to make contactless payments the accepted norm in Barcelona, announcing this week plans to issue up to 200,000 Tap Visa chip-based stickers that consumers can attach to the backs of their mobile phones.
The stickers will house an EMV chip that will contain the data required to complete payments as if the consumer was using a plastic card, La Caixa says. The chip also provides the same data encryption and security of a plastic card.
Consumers will be able to make contactless payments of less than 20 euros (US $26) by bringing a mobile device with the sticker close to the contactless reader at the payment terminal. Consumers would have to add a PIN to complete any purchase higher than 20 euros.
Issuing the radio-frequency identification stickers represents the next step for La Caixa, Visa Europe and the city of Barcelona in its “Barcelona Tap-and-Go Contactless” project, which was introduced at the start of 2012. The bank planned to distribute 1 million Visa PayWave debit cards by the end of the year and install 17,000 contactless payment terminals and 500 contactless ATMs over the same period.
The bank reported that, through November, it had distributed 770,000 Visa debit cards.
The bank forecasts that 200,000 customers will be using the contactless sticker system by February 2013 when Barcelona hosts the Mobile World Congress convention.
La Caixa has developed a free application to operate with the sticker with versions for iOS, Android, and Blackberry devices. The Tap application allows consumers to manage contactless transactions, view past transactions and pay in installments, the bank says.
La Caixa begins its sticker rollout with 5,000 customers taking part this month, with distribution extended through January and February.
Barcelona has become the model city for contactless payment, mainly because La Caixa has a reputation for innovation and the city hosts significant payments industry events during the year, says Zil Bareisis, a London-based senior analyst for research firm Celent.
“Focusing on a single city makes sense for projects which require investment in infrastructure, such as new POS terminals,” Bareisis says.
However, the rollout of the contactless stickers may signal the bank and city experienced difficulty in establishing a contactless or Near Field Communication project with a mobile network operator, Bareisis says.
“Many observers view contactless stickers as a ‘bridging’ technology,” he adds. “It’s another indication that the complexities of launching a partnership with a mobile operator remains a big obstacle in the industry.”
Contactless stickers represent “a good way to address the issuing side of the equation” for banks that are both an acquirer and issuer, Bareisis says.
“However, it’s hard to say what the value of stickers is over and above a regular contactless card, other than perhaps the fact that it helps consumers to start getting used to using their mobile phones for payments,” he adds.
LaCaixa says its objective with the project has been to increase transaction speed for merchants and provide consumers with various payment options in a world becoming increasingly mobile and digital.
Since the contactless project in Barcelona was launched in January, the bank has seen more than 1 million transactions completed, with the number of transactions less than 20 euros completed with a contactless card increasing by 15%.
In October, La Caixa completed another phase of the project in an agreement with the city’s taxi service to establish contactless card-reading terminals in 5,000 taxis over the course of the next year.
As for the Tap Visa sticker phase, Gareth Lodge, also a London-based industry analyst with Celent, provides a consumer viewpoint that banks may not always take into account.
“As my daughter said, ‘Why would I want to deface my lovely new iPhone with a horrible sticker?’” Lodge asks. And what if other issuers also send stickers that have to attach to the phone, he adds.
“Stickers will play a vital role—they’re quicker and cheaper to distribute, and easier to get people up and running than many other alternatives,” Lodge says. “But equally, we shouldn’t think that they aren’t without drawbacks.”