American Express Introduces Expresspay Card

Joining other card issuers who are modifying smart cards to enhance convenience, American Express is testing a smart card product that uses a radio transponder to transmit payment information at the point of sale. The new Expresspay card works in much the same way as the popular Exxon-Mobil Speedpass product, as well as EZ Pass-style highway tollbooth systems. Payment at the point of sale is made by waving the card at a payment terminal. The technology eliminates card swiping and signatures. The Expresspay card has been shrunk to about half the size of a normal credit card so that it can fit on a customer's key chain. The card has a $150 daily spending limit, contains no visible account number and can't be replicated, minimizing fraud worries.

Focus groups and testing led the company to design the card to capitalize on several consumer tendencies. First, the company discovered that "there is a very large reticence of consumers to use a credit card in places where they should be using cash," according to David Bonalle, Vice President and general manager of advanced payments development. He told the American Banker, "If you have to use a credit card to buy a $5 cup of coffee, you probably can't afford a $5 cup of coffee." To avoid sending such a signal to fellow customers in line, the Expresspay card provides an elegant and less obvious payment alternative. Even better, the company discovered that customers spend more when they use the Expresspay card. Three test sites demonstrated that customers using the card spent 17% to 33% more than those using cash. But, the big draw for customers (and merchants) is the time savings. The American Banker reports that a time-motion study that American Express conducted in 2002 found that ExpressPay transactions were 28% faster than cash and 42% faster than card transactions with no signature. For both reasons the company is targeting the product for use in cafeterias, fast food restaurants, supermarkets, movie theaters and other outlets with relatively low transaction sizes and high volumes of customer traffic.