If Barclays Bank PLC can convince its Visa cardholders that slapping a small sticker on their mobile phones won’t ruin the handset’s appearance, it may be on to something with its newest mobile-payment venture.

The United Kingdom-based bank announced April 19 it will provide a free contactless PayTag sticker, about one-third of the size of a plastic card, for placement on the back of mobile phones to support contactless payments.

The sticker, which will hold the Barclaycard Visa credit or debit card data, will allow consumers to make purchases of £15 (US$24 or 18.26 euros) or less by holding the phone over a payment terminal, Barclays stated. The issuer plans to raise the limit to £20 in June.

The consumer would not need to sign or enter a PIN for these types of micropayments, the bank noted.

However, plastic card security has been a hot topic for Barclays, as the PayTag announcement comes less than a month after a British public television Channel 4 investigation revealed holders of Barclays Visa contactless card were vulnerable to data theft from hackers standing near them with a mobile “reader” application (see story).

Barclays did not indicate if it was viewing the contactless sticker as an option to ease security concerns about the contactless card, saying only that the sticker was “100% covered” by the same fraud protections of the Visa card products.

Barclays already “leads the charge” on contactless payments in the UK because all of the cards it issues have contactless technology, Gareth Lodge, a London-based industry analyst with Celent, tells PaymentsSource.

“This means Barclays is positioning PayTag for convenience and those occasions in which I have my phone, but not my Visa card,” Lodge suggests.

While he believes Barclays and Visa deserve credit for another payment innovation for customers, Lodge contends customers likely won’t fully embrace the sticker option during the first months it is offered.

“Every journey starts with a single step, and [payments] habits have taken years to form and will take years to change,” he adds.

To the point of consumer feedback about putting a sticker on their phones, Lodge says when his 13-year-old daughter first heard about PayTag she asked why anyone would want to “deface a beautifully designed iPhone” with a sticker.

Barclays plans to begin distributing the free stickers within the next few weeks to roughly 400,000 customers, targeting distribution to coincide with the Queen’s Diamond Jubilee event scheduled for June 2 to 5.

The bank has a goal of having stickers out to “millions” of Barclaycard Visa cardholders by late 2012.

In a press release announcing the product, David Chan, CEO of Barclaycard Consumer Europe, stated Barclays hopes to provide consumers an option for easy and convenient “everyday payments without the need to upgrade their handset.”

“It will change the way we pay, and that's why we are giving people that change now," Chan added.

However, Zil Bareisis, another London-based senior analyst for research firm Celent, tells PaymentsSource that PayTag doesn’t really represent anything new.

“Contactless stickers have been around for some time, with many banks and providers having experimented with them,” Bareisis says.

The stickers are useful because they help overcome the lack of handsets able to make contactless payments, and the Visa card payment credentials are loaded onto the sticker, Bareisis notes.

While the PayTag sticker effectively replaces a contactless card, it does not provide the same experience as if it were a Near Field Communication product, Bareisis contends.

“It is not the same as having a mobile wallet in which the consumer can hold multiple payment credentials and receive coupons, receipts and other information back from the merchant’s NFC terminal, he says.

British media and technology bloggers have reported that the sticker actually does not need to be attached to a mobile phone. The sticker works if it is attached to a watch, a mobile tablet, a key ring, or even just placed in a person’s physical wallet, somewhat undermining Barclays’ marketing pitch that it is a mobile-payment method, the reports indicate.

Barclays confirms the sticker would work no matter where it is attached but discouraged attaching it to something the consumer may not carry as consistently as a mobile phone.

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