Our friends at MasterCard are working on the purchase transporter using technology from Star Trek but until that is ready to release we’ll just have to assimilate the new PayPass card.

I now have one of these little gems in my wallet, my bank sent it to me without asking. not sure what to make of that except the banks must fee the new contactless PayPass cards are going to generate more cash for them, probably in the form of transaction fees. Banks don’t do anything for free. But then again, MasterCard did say on their site “The statistics provided below are based on MasterCard transaction data and case studies conducted with participating PayPass issuing banks.”

MasterCard research has found that:

• Cardholders spend more with their PayPass card - Increased overall usage of 24% per PayPass account. Taking the effect of reactivation into account in the issuer case studies analyzed, increases grew between 28%-42%.
  
• Cardholders use their PayPass card more often ñ Increased transaction frequency per account of 32%. Taking the effect of reactivation into account in the issuer case studies analyzed, increases grew between 33%-52%.
  
• Cardholders use PayPass for smaller purchases ñ Average ticket for PayPass transactions is just under $19; close to 80% are for purchases $25 or less, a sign that PayPass is increasingly displacing cash.
  
• Cardholders use PayPass at merchants that mostly accept cash. Consumers get what they want when not limited to cash on hand.
  
• PayPass expands where cardholders use their card ñ As more consumers carry PayPass, acceptance at new merchants is growing in step. While cash remains more popular at these merchant types, PayPass is clearly gaining ground, and fast.
  
• Close to 80% of PayPass Transactions are under $25. Consumer preference for PayPass over cash continues to grow the card industry’s share of low value payments.
  
• Cardholders that tap with PayPass show the most significant growth. PayPass cardholders showed more significant growth in spend, transaction frequency than other segments of issuers’ portfolios.
  
• A MasterCard PayPass case study shows that 30% of the issuer’s portfolio of active PayPass cardholders drove 71% of the change in total dollar volume after being reissued with PayPass.
  
• MasterCard sees a direct correlation between portfolio profitability and cardholder awareness of MasterCard PayPass. Following marketing and communications best practices helps maximize PayPass issuers’ profitability and shows markedly different results from those that did not. The best practices include:

  Educating Consumers - Communicate simply and often;
  
  Training - Training the branch staff and call center staff on where and how to use PayPass and distribute FAQs;
  
  Considering Card Design - Display PayPass prominently on the card front.

  Source

So for me, since I avoid debt, the card might be easier to use and make getting out of the store less of a hassle.

But for unconscious spenders or people with financial issues or underlying issues that lead them to spend, the card could exacerbate debt.

As always, you should try to be as consciously aware of why you are buying something so you have the best chance to make an educated choice if you really want to make that purchase and spend that money.

PayPass Card Not Limited to United States

The PayPass card is making its way around the world as well. Evidently the economic benefits to banks must be just that could to warrant a global rollout.

Here are some global highlights about the card:

• Dubai First, in association with MasterCard Worldwide, has launched its Dubai First MasterCard credit card. The new card, which is offered in both 'classic' and 'gold', offers a cash back feature, with cardholders able to earn up to 4 percent for every purchase at retail locations in the UAE and abroad. The card also includes the 'Tap & Go' MasterCard PayPass feature, offering 'contactless' payments at selected locations on transactions below Dhs100.
  
• A majority of respondents (56%) believe that one day the world will be a cashless society where credit and debit cards will replace cash and checks for payments 75% of respondents believe that it is no longer necessary to have lots of cash on hand Two-thirds of respondents (66%) use cash less often than five years ago to make purchases. Only one-fifth (21%) of consumers are willing to wait in line for more than 10-minutes to make a purchase of less than $25
  
• Women are the most motivated to use contactless payments in order to avoid carrying cash
  
• There are numerous PayPass-related programs currently underway in 20 countries around the world. PayPass rollouts and trials have been announced in the Australia, Canada, China, France, Indonesia, Italy, Japan, Korea, Lebanon, Malaysia, Mexico, the Philippines, Spain, Switzerland, Taiwan, Thailand, Turkey, the United Arab Emirates, the United Kingdom and the United States.
  
• The Commonwealth Bank in NSW Australia has announced it expects hundreds of businesses, including McDonald's, Caltex and IGA, to adopt its PayPass technology in 2008. To make a payment up to $35, a consumer just taps a silicon-chip embedded credit card - or mobile phone - on a scanner and the amount is automatically deducted.

  But the increasing ease with which cards can be used is expected to worsen the country's credit problem.

  Michael Gleeson, from the Commonwealth Bank, said the PayPass system was being phased in across the state following trials on the Central Coast, Wollongong and in Sutherland.

  "The card never leaves your hand. As a result of that, the chances of fraud are virtually eliminated," he said. "It's far more secure technology. There are no consumer repercussions at all. In the event that the card is lost, stolen or inappropriately used, the bank assumes the risk, not the consumer."

So Is More Debt a Real Concern or Are Our Australian Friends Overreacting?

Check out this info from supermarketguru.com:

In one study, researchers asked several hundred families to do all of their buying with cash over a three-month period. At the end of three months, the same families were asked not to change their spending habits, but to use a credit card instead of cash to make their purchases. When they used plastic, the amount they spent rose between 20% and 30%.

In another study, a researcher at Purdue University instructed two groups of people to buy a pocket camera. He asked one group to pay cash for it and the other to buy it with a credit card. The group that used cash paid an average of $29.58. The credit card group paid an average of $52.67.

That's bad enough, but it gets worse. When we don't have to bother signing, it seems we tend to spend more. As Joyce Smith reported in the Kansas City Star, "While MasterCard (NYSE: MA) would not release figures, Visa said in 2005 its credit and debit cardholders spent $49 billion on small-ticket purchases, up 25% from 2004." - Source - Fool.com

What’s Next, An Implanted Chip?

Apparently, yes.

What About Fraud You Might Be Asking?

Well fraud is a real concern. Now that no identification is needed a crook with your PayPas could snatch and go. I guess the safety net is believed to be the $25 limit but it just makes it ever so more important that you check your bank activity even more frequently to make sure your account isn’t drained, leaving you without your money. But with the ability to check banking activity online, it’s much easier to watch over your account. Now if we can just remember to do that.

Just a Funny Commercial for U.S. Users